By Xavier Brenner The debate is on over whether the current run of lower energy prices (gas pump prices are at a four-year low) is a one-off or a long-term lift for the U.S. economy. There's a strong case for optimism and it goes beyond the boom in shale-generated oil and gas production in North America that's drawn attention in recent years.
The economics of renewable energy–wind, solar and hydroelectric power–are changing in a fundamental way, and that could lessen America's reliance on fossil fuels going forward. Consider what's happening in the auto industry, whose gas combustion engines are often cited by environmentalists as the scourge of the planet. Yet what if automakers in the U.S., Asia and Europe turn out to be part of the solution. The big global automakers, Toyota (TM), General Motors (GM), Ford (F) and Volkswagen (VLKAY) are investing significantly in low-emission vehicles and next-gen battery technology, a trend that could drive down the costs of alternative energy production along the way.
Tesla (TSLA), Panasonic (PCRFY) and other partners are investing in a mammoth, high-tech battery plant called Gigafactory. The project is expected cost up to $5 billion and to start operation in a Nevada desert by 2017. That matters because the lower the cost of these lithium ion batteries, the lower the cost of electric vehicles for consumers. And getting production costs on par with traditional gas combustion cars and trucks is crucial if a commercially viable mass market for electric vehicles is ever going to take off. Tesla says that it hopes to drive down the cost of its battery pack by more than 30% per kilowatt hour (kWh) during its first year of operation. The proposed Gigafactory will be a monster-sized factory. That's not an exaggeration. Check out this cool graphic from cleantechnica.com to get a sense of its scale.