Tesla has an edge over other EV markers thanks to cheaper batteries, and that's not likely to change this decade.

For years, many have asserted that one of Tesla's major advantages over other automakers is its low battery cell cost. Tesla leans on multiple battery makers, has its own battery factory in partnership with Panasonic, and is working on its own proprietary battery cells.

It comes as no surprise Tesla is leading the battery game. It has been making EVs at scale for years and its Nevada Gigafactory and partnership with Panasonic have been a driving force for years as well. As it ramps up its own cells and moves to structural battery packs and other cutting-edge technologies, it's likely to pull ahead of rivals even more.

Electric cars are more expensive upfront than gas cars primarily due to expensive batteries. For years, we've been told that battery prices will drop and eventually cause EVs to reach price parity with gas cars. Some experts say the magic number is around $100 per kilowatt-hour (kWh).

According to a recent study by Cairn Energy Research Advisors – a firm that has been tracking battery costs among automakers – Tesla pays an average of $142 per kWh. Keep in mind, automakers don't tend to disclose this information, and Tesla has different deals with various battery makers in different locations (some producing its new 4680 cells). Nonetheless, based on averages, Tesla is clearly ahead, and it only stands to widen its lead. The firm stated via CNBC:

“According to Cairn ERA, Tesla pays an average of $142 per kilowatt hour (kWh) for battery cells purchased from its three suppliers: Panasonic, LG Chem and CATL. By comparison, GM pays an average of $169 per kWh for its battery cells while the industry average runs at about $186 per kWh. Paying far less than other automakers for lithium-ion battery cells allows Tesla to also lead the industry in the cost to manufacture EV battery packs. Cairns data estimates that Tesla’s battery packs cost, on average, $187 per kWh while GM’s packs cost $207 per kWh and the auto industry spends an average of $246 per kWh for battery packs.”

The Tesla battery cost above doesn't factor in its own in-house batteries since there are few details related to the manufacture and deployment of the 4680 cells. However, we do know it's happening, and it seems Tesla is surging ahead with the cells more quickly than it anticipated at its Battery Day event. Managing director of Cairn ERA Sam Jaffe added:

“Tesla is definitely putting the hammer down on the accelerator pedal. They see this as the crucial period and they’re building out their capacities. Look at what they’re doing in Shanghai and in Berlin and now in Austin, Texas. They’re just piling factory upon factory.”

Jaffe says Tesla will remain ahead over the next decade. However, he does eventually see companies like GM catching up. GM's goal is to get to the $100/kWh mark in partnership with LG Chem.

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