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Will This Battery Startup Spell Trouble For Tesla Motors’ (TSLA) Gigafactory?

One of the most promising growth catalysts for the American electric automaker, Tesla Motors Inc (TSLA), is its $5 billion battery plant dubbed the Gigafactory. Tesla hopes the massive battery factory – spread across 10 million square feet of production space – will commence operations in 2017 and churn out as many as half a million lithium-ion battery packs when it reaches full capacity in 2020, and that too at 30% lower cost.

A cheaper, more consistent source of battery packs is a crucial component of Tesla’s lofty sales objectives, which require the automaker to deliver 500,000 EVs around the world by the year 2020. But another lithium-ion battery startup is gearing up to bulk-produce batteries at least two years ahead of Tesla.

Bloomberg reports that a battery startup called Alevo is planning to build a battery factory in North Carolina, with the capacity to make 16.2 gigawatt-hours of lithium-ion grid batteries per year starting 2015. Bloomberg says Alevo’s battery factory could elevate global supply of lithium-ion battery packs by about 150% from 2013 levels, possibly nipping away at demand for other battery makers like Samsung SDI and Tesla.

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