Tesla has never hidden the fact that the Model 3 and especially its $35,000 projected starting price are closely linked to the Gigafactory, which aims to reduce battery costs by more than 30%.

The automaker expects to achieve such a significant cost reduction through economy of scale with a factory output greater than the total world production of li-ion batteries in 2014 – when Tesla announced the project.

Beside economies of scale and incremental technology improvements, Tesla is likely to benefit from the recent decrease in cost of several metals used in the manufacture of li-ion battery cells. expand full story