The biggest disruption caused by EVs is not in the manufacturing supply chain, but in the fueling supply chain. There are billions of dollars of assets that would be made valueless if EVs came to dominate personal transport.
Much of the automotive supply chain would be unaffected. Take a look at a Model S: it has standard tires, windshield wipers, shock absorbers, and so forth. Sure, some parts will be made obsolete, and other parts will be added new. But these are shifts that happen constantly,
The biggest disrupter in the supply chain is, as you note, batteries. I think "gigafactory"is still the right term, because economies of scales will be fully exploited in the GWh range. A factory 100x larger than Tesla's gigafactory would employ 650,000 workers, which is unheard of and logistically stupid. So, although I understand your aspirational term, it's just not rooted in business logic or sound linguistics.
Yes, I agree. The biggest disruption is to oil. Disruption to the auto supply chain is pretty much limited to the ICE drivetrain. Spark plug makers are in trouble but not the auto glass makers. Does anyone have some stats on how big the ICE drivetrain industries are? Could this be as much as one third of the entire auto industry? So in terms of the fraction of the total auto industry to be disrupted economically, this may be about a third of components.
But actually, I think displacing ICE can have a bigger impact on the final automakers than just the component costs involved. That is, switching drivetrains has bigger design and performance implications that say switching from cassette players to CD players. To build a truly compelling EV, I suspect you really must design a new model from the ground up. Automakers who are only trying to market compliance cars can get away with redesign shortcuts, but to make a truly competive car I doubt this will cut it. This is especially true as battery density is just beginning to make EVs practical. Consider how much effort Tesla has put into reducing the weight and air resistance of the Model S. This is critical to achieving a satisfying range, given the energy density of its current battery pack. But suppose that a battery pack with say 100 kWh and a weight of 200 kg were presently available to car designers. With this kind of density, a fantastic range would be available without having to go to lengths for a more energy efficient design. Unfortunately, that sort of energy density may not be available for another 10 to 20 years. In the meantime, if you want to make a serious EV, you're going to have to do some serious design work.
To make a serious investment in designing EVs, an automaker will do well to lock in a basic battery pack architecture and durable supply chain relationships to deliver it in quantity. So basically, if an automaker is going to sell 500k EVs a year, they need to develop their own gigafactory. This is not to say that they must own it completely or even take a small equity stake in a JV. What I mean is they will need to secure a relationship with prinicipals in the JV such that they have a reliable supply of battery packs at reasonable prices.
One only need to look to the relationship that Toyota has with Tesla to see how critical this is. Toyota needed commitment from Tesla for a much larger supply of battery packs for the RAV4. Tesla being battery constrained is in no position to supply Toyota in quantity. Basically, Tesla is able to make about $25k gross margin per battery pack when they sell a Model S. Selling packs to Toyota means losing the opportunity to sell a certain number of Tesla vehicles. To be worth supplying Toyota, Tesla would need to add the opportunity cost of missed auto sales to the cost of the battery pack. This would imply a gross mass margin of 50% or more on battery packs, but only a 25% margin on the Model S. So basically Toyota would need to be willing to pass on all of the margin to Tesla for the pack as if Tesla were to make the entire vehicle. Naturally, this would leave Toyota with almost no margin for itself. Consequently, as long as Tesla is battery constrained itself, there can be no mutually enriching supplier deal in quantity for Toyota. Either, Tesla suffers the cost of lost opportunity or Toyota gives practically all the profit to Tesla. If Toyota really wanted to make this work, I believe their best options are to take an equity position in a gigafactory JV with Tesla and others or to take an equity position in a gigafactory JV with others but excluding Tesla as a partner. As Tesla has opened its patents, Toyota may well be able to develop a gigafactory without Tesla. In any case, any case Toyota needs to secure its share of the output of a gigafactory if it intends to produce EVs in quantity. It would be foolhardy to invest billions into designing compelling EVs from the ground up without securing the supply of battery packs, and since this supply chain is not yet mature an aspiring EV maker may need to pony up capital of its own to do so. This is what Tesla is doing. Why should it be any easier for anyone else?
As for a terafactory all in one location, I do not think this would ever be economical. Rather, I see that about 20 gigafactories will suffice and from a logistic viewpoint it would make sense to distribute these all around the globe. I could see Tesla having 3 in North America, 2 in Europe, 4 in Asia, and 1 in South America, rolling one out year after year for the next ten years. This way local gigafactories can produce pack from local resources for local markets. How long will it make sense to ship cells from Japan to California and packs from California to China and paying steep import taxes to China? For now, it works, but it is clearly not the most economical path for the future. The Terrafactory is most surely not a terafactory, but is a distributed network of local gigafactories positioned in such a way as to minimize the environmental, logistical and economic costs of building a global fleet of EVs.
