Slide showing Tesla Motors gigafactory statistics, from Feb 2014 presentationEnlarge Photo
Many within the electric car industry believe that $100 per kilowatt-hour will be the tipping point for electric-car batteries.
It is the point at which electric vehicles will be able to compete directly with internal combustion vehicles on price, and therefore a major step in boosting sales.
That's because it could overachieve on its stated goal of cutting 30 percent from today's battery costs.
We already know that Tesla's gigafactory will be huge.
The company's initial projected figures put the plant at between 500 and 1,000 acres, and once up to full capacity it is expected to employ 6,500 people.
By 2020, at its peak, it's slated to produce 35 gigawatt-hours per year of battery cells, and 50 GWh per year of battery packs--enough to supply Tesla's projections for half a million electric vehicles a year in 2020.
The idea behind the factory isn't just volume, but cutting costs. Tesla CEO Elon Musk has often said that savings of 30 percent on today's battery prices are possible with the gigafactory.
The company is thought to pay $200 to $250 per kilowatt-hour for its batteries today, the lowest cost of any plug-in car maker.
But further reductions are crucial to ensure that Tesla's third-generation vehicle, the smaller Model 3 electric sedan, is cost-competitive in a tough marketplace.
However, as The Motley Fool points out, that 30-percent figure isn't an ultimate goal for cost cutting--it's the bare minimum that Tesla expects to save, per battery pack, when Model 3 production is in full swing.
2014 Tesla Model SEnlarge Photo
In other words, the savings could be greater.
Crucially, Tesla's battery partner Panasonic agrees with that sentiment--suggesting that a 30-percent reduction by 2017 is a conservative estimate of the price drop.
Musk himself said in the company's second-quarter earnings call that he'd be "disappointed" if it took Tesla 10 years to get to the fabled $100 per kilowatt-hour pack.
Tesla won't reveal its current battery costs--no maker will--but signs point to $100 per kilowatt-hour now being within reach.
Tesla's Tesla chief technology officer JB Straubel adds that those pricing estimates are also based on current technology.
In other words, any cost and energy innovations between now and 2020 could further decrease that target.