Gigafactories: a new global race is on
July 5, 2023

Tim Miles

The transition to electric vehicles is creating a new supply chain. Can any modern economy hope to keep up with its rivals without building gigafactories for large-scale battery production?

While the concept of GDP has been the dominant measure of relative economic might between nations since it was first developed by Simon Kuznets in the 1930s[1], some features of an economy can act as powerful symbols of modernity or success. Just over a hundred years ago, countries would measure their industrial and economic potency through metrics such as coal and steel production or railway mileage. Today, gigafactories that produce batteries for electric vehicles on a large scale can be seen as performing a similar function.

A popular concept

The concept of a gigafactory is relatively new, coined in 2013 by Tesla CEO Elon Musk to describe the construction of the company’s massive new factory in Nevada, USA.[2] This is still the world’s largest lithium-ion battery factory, with an annual production capacity of 35 GWh. The concept has been enthusiastically adopted worldwide, with Governments keen to demonstrate their modernizing approach to economic development by citing the number of gigafactories they expect to be developed within their jurisdictions.

China leads

By 2020, China had already built or was building, 107 gigafactories, accounting for two-thirds of global capacity.[3] In the European Union, there are plans to build around 40 gigafactories by 2025, with a combined capacity of 468 GWh.[4] In the UK, however, plans to build a single gigafactory ran into major difficulties when the company set up to build it – Britishvolt – came close to bankruptcy at the end of 2022, before being acquired by Australian battery maker Recharge Industries.

In the USA, the ‘Build Back Better’ initiative focuses on green initiatives, targeting $400 billion for clean energy research and development, including new battery technologies, supported by a new Advanced Research Projects Agency (ARPA-C)  dedicated to combatting climate change. New gigafactories are already planned or in production, with multibillion-dollar investments by South Korea’s LG Chem, SK Innovation, General Motors and Ford.

The race for capacity

As the world transitions to electric vehicles and other large-scale consumers of battery storage technology, gigafactories dedicated to the supply of batteries are clearly going to play a key part in the economies of major countries and power blocs around the world.

In the race to build capacity, some economies are already pulling ahead of the crowd. China is in the lead, with Europe set to host the world’s second-largest concentration of gigafactories. The UK, however, is lagging behind other European countries. While The Faraday Institution estimates that ten 20 GWh gigafactories will be needed in the country by 2040, none are currently built or operational – apart from a plant dedicated to supplying the Nissan car factory in Sunderland.

A strategic choice

If the UK succeeds in building the required number of plants, it will account for just 5% of the European total, compared to a predicted 34% share for Germany alone.[5]

The importance of a strong gigafactory base, however, has little to do with flag-waving and the promotion of national pride espoused by some politicians. There are clear business reasons why gigafactories form an important strategic plank in any modern economy. As a key part of the supply chain, gigafactories make a country more attractive to manufacturers who need the batteries they produce. They also provide skilled, high-tech employment, accelerate a nation’s transition to net zero, and can act as a spur to research investment.

All things considered, any country that doesn’t have a viable and dynamic strategy to build gigafactories – or to mitigate their absence – will risk falling behind in the global economic picture.


[1] Nobel Prize for Economic Sciences, online at

[2] Tesla conference call to discuss 2102 Q4 results,

[3] International Energy Agency, Global EV Outlook 2021,

[4] European Commission, “A clean planet for all – a European strategic long-term vision for a prosperous, modern, competitive and climate neutral economy”

[5] The Faraday Institution, “UK Electric Vehicle and Battery Production Potential to 2040”,