Model S Battery Pack - Cost Per kWh Estimate

[pGo]

Have been following Tesla since 2010. My first post on the topic I am most interested in.

Having said that the price of battery cells that Tesla uses is dropping significantly, I would assume it would make it easier and more importantly faster to bring in Gen III to market.
Do you agree with that notion, CapOp?

During the Shareholders meeting, Elon mentioned that there is no need for significant breakthrough in battery technology to support Gen III price point. May be he was chuckling in his mind by visualizing the current battery price charts.

I think Elon can make a point by reducing the 8-year battery replacement cost now by half. This would eliminate any doubt on pricing that future owners may have. Many articles point battery replacement as a significant cost against generally fair reviews on Model S. How about a battery replacement of 85kw at 8 year period at 6K instead of current 12K.

 

[techmaven]

The IEK report was released in December, and referenced prices as low as $120/kWh in Q3 of 2012. The 3800mAh Ultrafire cells are running for half of that price right now, and Chinese companies making counterfeit Ultrafires are even lower. That is just a massive fall in prices over the course of less than a year. It's just nuts.

I assume that explains why higher quality, lower density 3100mAh cells from Panasonic might be going for $1, but the implications are just staggering. High quality cells selling for ~$90/kWh would make ICE uncompetitive. It's such a big story that I find it really hard to believe.

I did the same kind of research, but without actually placing an order for thousands upon thousands of Panasonic 18650 batteries and then verifying the authenticity upon receipt, I couldn't put much faith into it.

As for why some batteries are selling for really low costs - there are any number of explanations that may not apply to buying genuine Panasonic NCR18650A's direct from the factory. Further, it is likely that a long term purchase contract has been in place where the terms were set in early 2012. Therefore, temporary lows in cell pricing, as well as temporary highs are factored out. Mr. Musk did publicly reference hitting a milestone in that purchase contract in Q4 2012.

Funny that the Barron's article references that the current battery costs were unlikely to drop from the current $400/kWh to $200/kWr by the time of Gen III.

One would think that anyone putting serious money for or against TSLA stock should have done enough due diligence to know that $400/kWh is absolutely absurd.

 

[jerry33]

Part of the success of Tesla hinges on the existing auto industry having their heads up their asses

I don't believe anything that is said in a forum is going to change that.

 

[blakegallagher]

I just read the article. Screw Barrons. I'm gonna do an article with the data I have. Elon was right to hang up on them.

Awesome !! I have been hoping you would put this in an article and submit it to green car reports ... I will be counting down until one of the "authorities" run a nearly identical article

- - - Updated - - -

@CO, thanks for some really great and insightful analysis.

This forum has a lot of incredibly good digging. But there is one question I keep asking myself - does it really help Tesla's case that we're all digging and unearthing Tesla's competitive advantages and pointing out where the existing auto industry is wrong? Part of the success of Tesla hinges on the existing auto industry having their heads up their asses and not catching on that battery technology is, in fact, right on the border of making cheap electric cars viable. I would hate to see Tesla get more competition right away because this forum has helped educate them. Executives and board members can remain ignorant for a long time when there is disruptive change going on, but *someone* inside the established carmakers has got to see the writing on the wall right now.

This is not meant as criticism of your analysis, it's just that this worries me a bit - I have felt hesitant posting my thoughts occasionally because of this.

I don't really think it matters. To me this is like saying what if NASA tries to out engineer Space X ..... they can't .... enough said lol. I use to share your concern but Tesla is so far ahead of the game.... another point is the Consumer Report rating .... If the big automakers could make cars that score a 99 all the time they would .....

 

[CapitalistOppressor]

I did the same kind of research, but without actually placing an order for thousands upon thousands of Panasonic 18650 batteries and then verifying the authenticity upon receipt, I couldn't put much faith into it.

As for why some batteries are selling for really low costs - there are any number of explanations that may not apply to buying genuine Panasonic NCR18650A's direct from the factory. Further, it is likely that a long term purchase contract has been in place where the terms were set in early 2012. Therefore, temporary lows in cell pricing, as well as temporary highs are factored out. Mr. Musk did publicly reference hitting a milestone in that purchase contract in Q4 2012.



One would think that anyone putting serious money for or against TSLA stock should have done enough due diligence to know that $400/kWh is absolutely absurd.

I agree with this totally. It might well be that the purchase contract would cancel out some of the variability, and it it was written narrowly enough it might prevent Tesla from capturing some of the benefits. But I doubt that it's quite so restrictive as that over the 4 year term they signed for.

Plus, Panasonic is a major investor in Tesla, and could make far more money on their investment in Tesla by continuing to offer the lowest possible price for the batteries, and thus allowing Tesla to beat expectations on profitability, and raising the share price.

Not to mention the fact that Tesla is not required to keep Panasonic as a supplier in the future. If Panasonic is able to profitably make these cells at $1/cell, its probably not worth the extra $50-$100m in short term profit they could extract from an onerous production contract. In a decade, Tesla will represent billions of dollars worth of profit potential for Panasonic. Pissing Tesla off is not a smart business move.

 

[Bgarret]

I did the same kind of research, but without actually placing an order for thousands upon thousands of Panasonic 18650 batteries and then verifying the authenticity upon receipt, I couldn't put much faith into it.

As for why some batteries are selling for really low costs - there are any number of explanations that may not apply to buying genuine Panasonic NCR18650A's direct from the factory. Further, it is likely that a long term purchase contract has been in place where the terms were set in early 2012. Therefore, temporary lows in cell pricing, as well as temporary highs are factored out. Mr. Musk did publicly reference hitting a milestone in that purchase contract in Q4 2012.



One would think that anyone putting serious money for or against TSLA stock should have done enough due diligence to know that $400/kWh is absolutely absurd.

Techmaven. I would agree with you 100%., but if you read other sites, seeking alpha, motley, blogs...the level of ignorance (as vitriol) is astounding. Even the Morgan Stanley analyst with a $109 price target that has generally been favorable to Tesla comes off as ignorant to costs in the article. Don't underestimate the ignorance of the detractors.

 

[CapitalistOppressor]

Have been following Tesla since 2010. My first post on the topic I am most interested in.

Having said that the price of battery cells that Tesla uses is dropping significantly, I would assume it would make it easier and more importantly faster to bring in Gen III to market.
Do you agree with that notion, CapOp?

During the Shareholders meeting, Elon mentioned that there is no need for significant breakthrough in battery technology to support Gen III price point. May be he was chuckling in his mind by visualizing the current battery price charts.

I think Elon can make a point by reducing the 8-year battery replacement cost now by half. This would eliminate any doubt on pricing that future owners may have. Many articles point battery replacement as a significant cost against generally fair reviews on Model S. How about a battery replacement of 85kw at 8 year period at 6K instead of current 12K.

Welcome to TMC!

I don't think "faster" is possible, unless you are talking about 2016 instead of 2017. It takes a significant amount of time to engineer an excellent car. Period.

3 years is something close to what we should be expecting. Tesla just recently hired a new Chief Engineer to railroad this project, so I am expecting a prototype reveal, hopefully by the end of this year, but in early 2014 at the latest.

In terms of battery costs, we are already where we need to be. If my research is correct, and high quality NCR18650 cells can be had in industrial quantities for ~$1/cell, that is an incredible breakthrough already. More so since I actually think the price for the 3400mAh cells is essentially the same as the 3100mAh cells right now.

If you were trying to design a hypothetical Gen III car that is 20% smaller than the Model S, you could assume a battery using ~6336 cells, each 3400mAh, and get a 77.5kWh battery, with ~70kWh in the 5-95% SOC that the Model S uses. Because its a smaller car, range would be similar to an 85kWh car, and performance might be only a little less (because of fewer cells, though I haven't modeled this).

A finished pack of this sort could be built for ~$8,000-$8,400 at current(?) prices which is probably well within the range necessary to build a BMW 3 class vehicle that retails for $40k ($32,500 after tax credit).

So, I think a Gen III could be profitably built right now if Tesla had been doing engineering work on it for the last 3 years. Unfortunately, they didn't have the cash to do that, and likely did not expect prices to fall quite so quickly. So we need to wait until 2016 before we see Gen III. And at that point, I expect them to use a 3800-4000mAh battery instead of a 3400mAh, to get better range and performance. But the 3400mAh battery might be able to do the job if required.

 

[ShortSlaver]

If you were trying to design a hypothetical Gen III car that is 20% smaller than the Model S, you could assume a battery using ~6336 cells, each 3400mAh, and get a 77.5kWh battery, with ~70kWh in the 5-95% SOC that the Model S uses. Because its a smaller car, range would be similar to an 85kWh car, and performance might be only a little less (because of fewer cells, though I haven't modeled this).

I would think one of the strategic decisions that would be made would be to software limit the performance as economy and drivability are the requirements for this car, not performance. 0-60 in 4 seconds has to consume more charge than a steady rise up, for instance in most cases as a brake is going to be quickly applied.

The Model S has to perform better at ICE's at the same level because it has something to prove and the market it is being sold to is one which demands a high performance vehicle. Economy isn't a concern.

I believe that the Gen 3 will outperform similar cars at it's level still, but it would make sense to optimize battery life by toning down how the battery is used, right? This could imply a Gen 3 that gets better battery use per dollar or a Gen 3 with fewer batteries lowering the cost all together.

Does economy really effect EV's though? I don't know. I know a lot of the ICE economy issues are with it being how they work mechanically.
- - - Updated - - -

Techmaven. I would agree with you 100%., but if you read other sites, seeking alpha, motley, blogs...the level of ignorance (as vitriol) is astounding. Even the Morgan Stanley analyst with a $109 price target that has generally been favorable to Tesla comes off as ignorant to costs in the article. Don't underestimate the ignorance of the detractors.

These people are only trained to use traditional models on products that have existed for a long time to determine their estimates. They are oblivious to EV costs the way Tesla is doing it and how it is so much different than forging massive ICE blocks and sourcing the thousands of random parts from all over the place.

They also likely have many financial interests tied up in the old model. Don't trust any financial writing. If these people knew anything they wouldn't be writing about it - they'd be investing in it. Quietly.

 

[CapitalistOppressor]

Techmaven. I would agree with you 100%., but if you read other sites, seeking alpha, motley, blogs...the level of ignorance (as vitriol) is astounding. Even the Morgan Stanley analyst with a $109 price target that has generally been favorable to Tesla comes off as ignorant to costs in the article. Don't underestimate the ignorance of the detractors.

Yes, the level of ignorance on this issue is pervasive. Even academics get this issue wrong, because they've been studying how the "auto-industry" manufactures batteries, and what those costs are. Tesla, and it's use of 18650 commodity cells is a footnote at best. Goldman Sachs obviously did enough research in 2012 to conclude that the cost was $22,500 for an 85kWh pack. But even they were obviously using trailing data (probably an academic study referencing 2011 prices similar to what IEK puts out).

I seriously doubt that any senior executive in Detroit has a clue what is going on. Executives at Toyota and Daimler might know because they are purchasing packs from Tesla. Beyond that, groupthink probably rules the day.

- - - Updated - - -

@CO, thanks for some really great and insightful analysis.

This forum has a lot of incredibly good digging. But there is one question I keep asking myself - does it really help Tesla's case that we're all digging and unearthing Tesla's competitive advantages and pointing out where the existing auto industry is wrong? Part of the success of Tesla hinges on the existing auto industry having their heads up their asses and not catching on that battery technology is, in fact, right on the border of making cheap electric cars viable. I would hate to see Tesla get more competition right away because this forum has helped educate them. Executives and board members can remain ignorant for a long time when there is disruptive change going on, but *someone* inside the established carmakers has got to see the writing on the wall right now.

This is not meant as criticism of your analysis, it's just that this worries me a bit - I have felt hesitant posting my thoughts occasionally because of this.

Elon just told off Barrons on this issue. Think of TMC as doing Elon a favor by educating the press so that he doesn't have to waste his time on interviews over non-existent issues.

More importantly, if the public think that Tesla can make cars cheaply, because batteries are cheap, they will be more inclined to start educating themselves about Gen III. I fail to see how a story about how Tesla already has the technology to build really nice, and inexpensive vehicles, would be anything but good for the Tesla brand. Even if the majors copycat Tesla, everyone is going to know that Tesla is the leader in the technology.

 

[30seconds]

I would expect gen3 to be like the modelS but better. I'm sure there have been lots to learn, plus since the engineering cycle is much later they will be able to take advantage of other advances besides the battery. There will probably at least as many variants- economy, sport and performance as well as SUV. Telsa seems to be taking a similar path as BMW with regards to platform reuse. As far as I know BMW has a "big" platform for the 7,6 and 5 series sedans and X5; a moderate platform for the 3 and 4 series cars and X3 and a small for the 1 and 2 series sedans, the X1 and the Z4. Very efficient.

 

[DonPedro]

And meanwhile, in Detroit: Is GM Working On Tesla-Beating Batteries?

 

[stopcrazypp]

And meanwhile, in Detroit: Is GM Working On Tesla-Beating Batteries?

This is not news, these are the Envia batteries, discussed at length here (once again showing TMC is a couple steps ahead of most analysts):
http://www.teslamotorsclub.com/show...Stupid!/page60?p=116861&viewfull=1#post116861

They are prototype cells with 1.63x (400kWh/kg) the gravimetric energy density of the current 3100mAh cells in the Model S (245kWh/kg), but by the time Tesla has a Gen III ready in 2017, the battery technology will be different in both density and cost. Even right now, the latest production 3400mAh cells (out since early 2012) reduces that advantage to 1.46x (269kWh/kg).

To get more technical, Envia achieves their density from both silicon anodes and high voltage electrolyte. Panasonic is definitely working on both (they will be releasing their first 4000mAh silicon anode cell this year).

 

[CapitalistOppressor]

This is not news, these are the Envia batteries, discussed at length here (once again showing TMC is a couple steps ahead of most analysts):
http://www.teslamotorsclub.com/show...Stupid!/page60?p=116861&viewfull=1#post116861

They are prototype cells with 1.63x (400kWh/kg) the gravimetric energy density of the current 3100mAh cells in the Model S (245kWh/kg), but by the time Tesla has a Gen III ready in 2017, the battery technology will be different in both density and cost. Even right now, the latest production 3400mAh cells (out since early 2012) reduces that advantage to 1.46x (269kWh/kg).

To get more technical, Envia achieves their density from both silicon anodes and high voltage electrolyte. Panasonic is definitely working on both (they will be releasing their first 4000mAh silicon anode cell this year).

Any thoughts on whether you think Tesla will use this cell as the basis for Gen III? A quick look at a couple of articles from 2010 make them seem not as durable thanks to the silicon swelling during lithiation. Do we have a better idea of what the specs are now?

 

[marvinat0rz]

Battery cell breakthroughs are announced all the time, but they often end up failing at one point or the other when they are about to enter production. This is just a gut feeling, but I think that Tesla's "commodity" approach of using thousands of cheap cells is a better bet than going with larger cells, which is what Envia's approach appears to be. Envia's cells are also unproven and not in production. Incidentally, Tesla's technique of using commodity cells in a larger pack is very analogous to what Google did with servers about a decade ago (and equally untraditional).

Researchers often underestimate the costs of putting a product in volume production, testing to iron out problems etc. Again, just a gut feeling, but Panasonic has economies of scale which a battery start-up won't have - this is an advantage which Tesla can leverage.

 

[stopcrazypp]

Any thoughts on whether you think Tesla will use this cell as the basis for Gen III? A quick look at a couple of articles from 2010 make them seem not as durable thanks to the silicon swelling during lithiation. Do we have a better idea of what the specs are now?

We won't find out real specs until they are in production (so the datasheet is released) and reaches the hobbyist market (where they will be evaluated for performance).

But the press release back in 2009 indicates that the gravimetric energy density is only 252Wh/kg (about the same as the current 3100mAh cells) because of a lower 3.4V nominal voltage and also being heavier per cell. The volumetric density is still very good though at 800Wh/l.
http://panasonic.co.jp/corp/news/official.data/data.dir/en091225-3/en091225-3.html

I think it may be unlikely GenIII will use these cells, but more likely a next gen version of this (with the high voltage electrolyte). The 4000mAh helps save space, but not really weight. Panasonic didn't announce any work on high voltage electrolyte, but I can say with certainty they must have something in the lab since Samsung/LG has already released cells with that technology (with 3.8V nominal voltage vs the current 3.6V and a higher 4.35V charging voltage vs 4.2V).

 

[Darko]

I'd like to add my appreciation to the pile to CapOp, and by extension StopCrazy for their assiduous research on this topic. I've learned an enormous amount, although it's taxing my memory of college physics. It's an interesting contrast to the vapid Barron's article just the other day, that lazily questioned such very issues of battery technology and cost.

I have a question that I hope is not off-topic but stems from CapOp's calculations: at what point does the cost of the battery (and the induction motor, inverter, charger, and electronics - the "drivetrain") of an EV equal the cost of the equivalent motor, transmission, exhaust, etc. of an ICE? I'm wondering if Tesla hasn't already or is near to reaching that crossing point. If so, it seems their challenge for Gen III is more clear: find the cost of savings in industrial-scale production that the car industry has already perfected - basically learn the ropes of becoming a large-scale car-producer in terms of fabrication techniques, design tweaks, and economies of scale - but that further cost savings in batteries can only go so far (aside from an unending consumer desire for a larger battery and range). More generally, if I step back and think of the fewer moving parts and attendant minimum tolerances of an EV compared with an internal combustion engine, the EV appears high-tech from the perspective of basic research, but once those breakthroughs are achieved, cheaper from a fabrication perspective.

 

[CapitalistOppressor]

I'd like to add my appreciation to the pile to CapOp, and by extension StopCrazy for their assiduous research on this topic. I've learned an enormous amount, although it's taxing my memory of college physics. It's an interesting contrast to the vapid Barron's article just the other day, that lazily questioned such very issues of battery technology and cost.

I have a question that I hope is not off-topic but stems from CapOp's calculations: at what point does the cost of the battery (and the induction motor, inverter, charger, and electronics - the "drivetrain") of an EV equal the cost of the equivalent motor, transmission, exhaust, etc. of an ICE? I'm wondering if Tesla hasn't already or is near to reaching that crossing point. If so, it seems their challenge for Gen III is more clear: find the cost of savings in industrial-scale production that the car industry has already perfected - basically learn the ropes of becoming a large-scale car-producer in terms of fabrication techniques, design tweaks, and economies of scale - but that further cost savings in batteries can only go so far (aside from an unending consumer desire for a larger battery and range). More generally, if I step back and think of the fewer moving parts and attendant minimum tolerances of an EV compared with an internal combustion engine, the EV appears high-tech from the perspective of basic research, but once those breakthroughs are achieved, cheaper from a fabrication perspective.

Most commentary I've seen on the subject points to ~$100/kWh. There are weight and volume barriers as well that might make the current cells difficult to engineer into subcompacts at subcompact prices, but at least you are in shouting distance.

That's why it would be such a huge deal if these cells are $1 each like all of the advertisements say.

Edit: And yes, if the pricing on these cells is even the $160/kWh I pointed to in my OP, it is almost certainly less expensive than the uber complex and expensive drive trains that BMW and Mercedes use in this class.

 

[kenliles]

I think it may be unlikely GenIII will use these cells, but more likely a next gen version of this (with the high voltage electrolyte). The 4000mAh helps save space, but not really weight. Panasonic didn't announce any work on high voltage electrolyte, but I can say with certainty they must have something in the lab since Samsung/LG has already released cells with that technology (with 3.8V nominal voltage vs the current 3.6V and a higher 4.35V charging voltage vs 4.2V).

This was my thought as well- my research points to a timing of GENIII that would use the next iteration - and reading between the lines of both Elon and JB, I think they are planning around a more significant step change than offered by this one; Just conjecture on my part of course - no real info to support it

 

[CapitalistOppressor]

I'm not sure if I failed to notice these before, or if I was just refusing to acknowledge the possibility that they exist. Ads from Aweite seemingly offering the Panasonic 3100mAh cells for $0.80 -

Tesla Motors Club - Enthusiasts & Owners Forum

Also from Aweite pricing for Panasonic 3400 cells seeming to change over time (though I'm not sure what order) -

$2-3.2

Tesla Motors Club - Enthusiasts & Owners Forum

$1.8-3.5

Tesla Motors Club - Enthusiasts & Owners Forum

$1-3.2

High Capacity 3.7v 18650 3400mah Li-ion Rechargeable Battery, View 3.7v 18650 3400mah Li-ion Battery, Panasonic Product Details from Shenzhen Aweite Battery Technology Co., Limited on Alibaba.com

 

[Darko]

Most commentary I've seen on the subject points to ~$100/kWh. There are weight and volume barriers as well that might make the current cells difficult to engineer into subcompacts at subcompact prices, but at least you are in shouting distance.

That's why it would be such a huge deal if these cells are $1 each like all of the advertisements say.

Edit: And yes, if the pricing on these cells is even the $160/kWh I pointed to in my OP, it is almost certainly less expensive than the uber complex and expensive drive trains that BMW and Mercedes use in this class.

Interesting. Tesla may have already passed that critical threshold of battery cost to ICE comparison and hardly anyone is aware because its buried in the cost of a luxury sedan that the company is just beginning to optimize in terms of assembly line efficiencies, supply chains, etc.

And to your point of uber complexity, it not only may now beat BMWs and the like in total drivetrain price but does so while effortlessly outperforming them as well.