Elon Musk’s auto manufacturing firm Tesla appears to be in the lead in the “arms race” for lithium-ion batteries, but others may be soon to follow, a former prominent Credit Suisse research head told CNBC on Monday.

Musk recently announced plans to build the world’s biggest lithium-ion battery storage project in South Australia. Meanwhile, construction of the company’s highly anticipated 35-watt-hour “Gigafactory 1” lithium-ion battery factory is still underway.

“There’s a kind of arms race on batteries around the world. We know that Elon Musk with Tesla has got this Gigafactory. The Chinese are racing to overtake him; they’ll have three times the capacity. And then in Germany, we’ve just heard announcement of a new plan for a $1 billion factory on batteries,” Giles Keating, now the chairman at investment consultancy Werthstein Institute, told CNBC Monday.

A report published by Bloomberg Intelligence in June said that factories planned by Chinese companies could have the capacity to produce more than 120 gigawatts an hour by 2021 – enough to supply 1.5 million Tesla Model S vehicles.

And a German consortium of companies led by Frankfurt-based start-up TerraE Holding GmbH is currently preparing to set up its own 34-watt-hour lithium-ion battery cell production facilities, touted as Germany’s answer to the Gigafactory.

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