Subsidy Independent EVs, Solar And Battery Storage By 2020


solar parityLast month investment bank UBS  released a report charting the disruptive triangle of solar, EVs, and energy storage. The report claimed that by 2020, payback time for unsubsidized investment in EVs, solar, and battery storage will be as low as 6-8 years – triggering global changes in the energy industry.

The report begins by stating that the solar panels and batteries will become disruptive technologies for the electricity system. Solar in many cases is becoming a competitive power generation technology as it approaches parity leaving the final hurdle, intermittency. This is where batteries and EVs come into play. Here are some highlights from the report.

Key controversial debates

UBS writes:

“Can solar ever be economically viable without subsidies due to its intermittent character? Our answer: YES. The market is not yet looking at the topics of solar, EVs and stationary batteries with a holistic view. Our proprietary model shows it is the combination of the three that makes solar fully competitive and that has the potential to bring disruptive changes to the electricity sector. Here are the maths: One can leverage the EV purchase with an investment in a solar system and a stationary battery. By doing so, one can optimise the self-consumption of solar power and minimise the “excess waste” of solar electricity. And what also may matter to many EV buyers: The electricity used to drive the car is carbon-free. The combination of and EV + solar + battery should have a payback of 7-11 years, depending on the country-specific economics. In other words, based on a 20-year technical life of a solar system, a German buyer should receive 12 years of electricity for free (purchase in Germany)”

global sales EV

“This is why we expect a rapidly growing penetration with EVs, in particular in countries with high fossil fuel prices. Thanks to EV-driven economies of scale, we also expect the cost of stationary batteries to drop c50% by 2020. Based on UBS proprietary analysis, battery storage should become financially attractive for family homes when combined with a solar system (and an EV). As a consequence, we expect transformational changes in the utility and auto sectors”


UBS continues by forecasting 10% penetration by EVs in Europe by 2025.  UBS says that while the initial penetration will be due to incentives, they declare that it will continue because EVs pay off.  UBS forecast that battery pricing will fall by 50% by 2020 not only causing exponential growth in the EV market but also stimulating stationary battery storage both  commercial and residential.

“By then, a mass segment EV will have almost the same sticker price as the ICE, while saving up to €2,000 per year on fuel cost in the European market, hence, it will begin to pay off almost immediately without any meaningful upfront “investment”.

EV competitive

Recently the LA times reported that the sales of electrified vehicles had stalled. While the author, Charles Fleming, has lumped hybrids (HEVs) together in his original report, he further states that plug-ins were soaring though still in small numbers. Fleming concluded that hybrid (HEV) sales have stagnated due to low fuel cost. The above UBS table suggest a greater second  factor which is the lowering in battery cost, thus offering another possibility effecting the shifting sales from HEVs toward EVs. UBS list current battery cost at $360/kWh. While lowering gas moves toward ICEs, lowering price of batteries, we point out, will move the market sooner toward EVs.  The price of batteries are falling faster than the price of gas, or improved ICE efficiencies,  thus effecting the ultimate outcome. Back to the UBS highlights.

“Later on we think True cost parity with ICE from a buyer’s perspective will spur replacement demand especially as consumers see added benefit from self-generation of electricity as an additional cost reduction. This should lead to further economies of scale for OEMs, particularly in battery costs, and make EVs profitable
for OEMs. “

lithium battery decline

Nirvana occurs at $100 per kWh

“The expected rapid decline in battery cost by (more than) 50 per cent by 2020 should not just spur EV sales, but also lead to exponential growth in demand for stationary batteries to store excess power. This is relevant for an electricity mix with a much higher share of (volatile) renewables.”

“Large-scale power generation, however, will be the dinosaur of the future energy system: Too big, too inflexible, not even relevant for backup power in the long run.”

UBS says centralized fossil fuel generation  will become “extinct” – and it will happen a lot sooner than most people realize.

“Our view is that the ‘we have done it like this for a century’ value chain in developed electricity markets will be turned upside down within the next 10-20 years, driven by solar and batteries.”

“As a virtuous circle, lower battery cost will also spur EV sales, which should bring further economies of scale to batteries, also for stationary applications. Power is no longer something that is exclusively produced by huge, centralised units owned by large utilities.”

“By 2025, everybody will be able to produce and store power. And it will be green and cost competitive, ie, not more expensive or even cheaper than buying power from utilities.”

“It is also the most efficient way to produce power where it is consumed, because transmission losses will be minimised.”

solar cycleEV + solar + battery = the natural fit
The below figures explain why solar + stationary battery + electric vehicle (EV), in combination with smart demand, is an almost perfect fit. EV charging during the night smoothes the daily demand curve. The stationary battery stores excess solar electricity during the day and releases it in the evening hours. The remaining
supply gap will be filled with electricity from the grid during the night/early morning hours, which is when spot prices are low and there is excess base-load and wind power supply. On top (not illustrated below), the stationary battery may be re-charged in the early morning hours with excess grid electricity (at low prices) and supply the morning demand peak during breakfast hours.”

“We think large-scale power plants are the structural losers from this trend, as they are too big and most of them are too inflexible. ”

“Not all of them will have disappeared by 2025, but we would be bold enough to say that most of those plants retiring in the future will not be replaced.”

“Large-scale power stations could be on a path to extinction.”

UBS says in a note to clients:

“It’s time to join the revolution.”

Categories: Battery Tech

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80 Comments on "Subsidy Independent EVs, Solar And Battery Storage By 2020"

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Interesting. This could work for states like Arizona that get lots of sun. But 2025 sounds pretty optimistic. That’s only 11 years away. Also, 150$/kwh doesn’t mean a slam dunk for integrated solar with battery backup unless the panels get a lot cheaper. Right now you can do lead acid for 100-150$/kwh but it still adds considerably to the cost since you need around 30 kwh or so. That’s 4500$ for battery backup and most homeowners don’t want to spend that. and what about the utilities? They aren’t just going to go out of business. Perhaps the utilities could get into the storage business. They are in it right now for those “net zero” solar people that get storage for free. Personally I think the power companies should charge people for storage. This business about letting people put kwh in take them back out for no cost will have to end if the power companies want to stay in business. They do it for me right now with my solar system in Az. I put 5 months of electricity generated at my desert house into the grid while I’m gone and then draw it back out for free. Is it… Read more »

I foresee a possible scenario where energy is traded online, a sort of “ebay for electicity” in which everyone with a PV or wind system has an account. Traditional energy provides become more like brokers, just middlemen. They distribute and meter, and of course take a cut of the action. Just like eBay. We the people could then trade between ourselves auction style. If today citizen X is offering electricity cheaper than the utility, I buy it. Let the free market decide. The utility is free to compete if they like, and install their own soon-to-be-cheaper-than-coal generation in order to do so.

Utilities will fight this disruptive change tooth and nail. Like the ridiculous fees they charge in AUS for reading your meter, which probably costs them around 20 bucks and then they turn around and charge the companies 500 for reading it, oh and of course they have to read it everyday. On a theoretical basis the article is probably accurate, but theory and practice are quite different.

Why don’t you just get an automatic meter?

I have one and they still charge. They claim the fees covers the cost of reading the meter and processing the bill.

10% plug-ins of new sales in the EU in 2025? *lol*…. By 2020 EU regulations demands the average new car to be down to 95g/km from the average todays number of 130g/km. That’s a reduction of 27% in 5 years. What will this do to the manufacturers? Well, to take the popular BMW 3 series (9th best selling model in Europe in 2013) for an example. The smallest and least powerful BMW 3-series petrol engine you can buy today is at 134 g/km. That would mean that they would have to sell one 25 mile PHEV for every regular car or one BEV for every 2 regular cars. Now you say “but won’t they improve their motors by then too?”. I say, sure but who do you know that bought a BMW and picked the smallest engine avaliable anyway? So even with redutions BMW will probably have to sell somewhere between 33-50% of plug-ins by 2020. The same goes for all manufacturers that don’t want to focus on small, light weight, low power diesels (like the french manufacturers) such as BMW, Mercedes, Volvo, Audi and partly VW. Even the most lightweight and fuel efficient car manufacturers will surely not make… Read more »

Oh… another example. You know Norway? In march 2014 they broke an all time record for EV’s with crazy 20,3% pure BEVs and another 2,3% PHEVs.

And with extremely high taxes on co2 emissions, weight and motor power the rest of the cars are pretty efficient too.

You know what their average g co2/km for new car sales was during that extreme month?

101 g/km.

Now take a deep breath and just imagine what will have to happen for the whole of EU to get down to under the levels of the most extreme month in the history of EV’s so far.

The German car industry in particular will not allow itself to be put out of business by strict implementation of 2020 standards.

Life’s messy, and progress will be made, but the compliance date will be pushed back, perhaps to 2022-5.

We will get there though.

US commentators will correct me, as I have not studied the matter in any depth as the amount of sun that different regions in the US gets varies enormously, and consequently the economics, and also the rates for off peak power differ greatly by region and utility. My comments should not be taken in any way as a critique of solar in the US per se, as I have on another forum calculated that at least 250GW nominal or perhaps 50Gwe average is perfectly practical for the US, as that is the difference for the US as a whole for peak summer load over peak winter loan. The critique I came across and have not investigate is that the big financial players are now trying to get in on the act, creaming off the benefits and landing customers with unfavourable deals. Solar City has been mentioned in this context: Now whilst many here are extremely keen on Musk, and he undoubtedly has engineering cred, having watched the way he operates I would surely count my fingers after shaking hands with him. No doubt I am too cynical, and others have more confidence in august financial institutions like UBS, but… Read more »

That made me chuckle. power Purchase agreements may not be the best deal, especially if you have cash or strong financials, but if the alternative is paying 15-20% higher utility bills, Mr Musk has pushed a few dollars in your pocket after shaking hands.

As I posted on this thread, it appears that Mr Musk is more concerned with taking a substantial proportion of what you could have saved had you shopped elsewhere, but as I noted I have not done the case comparisons for the different regions and utilities in the US to substantiate that point.

Have you to show the contrary?

Davemart, i did mean chuckle in a good way, btw. I’ve enjoyed reading your posts

I wrote a story about this for the upcoming print edition of Electric Car Insider magazine which will be out in a few weeks. It will be on the web sometime later.

There are a lot of options out there. As with buying a car, one has to break out a pad of paper or more helpfully a spreadsheet and put a critical eye to the numbers.

But Solar City isn’t the market leader because they’re running around picking pockets. They’re making a lot of friends by offering no money down cheaper, cleaner electric power. That now includes battery backup.

My local utility never offered me that deal.

As I said, I have not looked at the figures in any detail, and certainly not in respect of any deals which are available in particular areas of the US.

No doubt it is my cynical and suspicious nature, but I tend to be suspicious of billionaires in general:
‘At the foundation of every great fortune lies a great crime’ – Tolstoy

Musk raises my suspicions more than most.

“But Solar City isn’t the market leader because they’re running around picking pockets. They’re making a lot of friends by offering no money down cheaper, cleaner electric power.”

But IMHO, these “No Money down!” deals are picking the pockets of people that don’t run the financing numbers. Those consumers would be much better off financially by financing the systems on their own instead of signing up for these solar leases with their escalating payment plans and high buy-out costs.

I thought I read somewhere that the utilities in Ca were trying to make it where one could not install batteries in residential.

To take a deal like that when it obviously would be better to buy a system yourself will probably mostly be people who are unaware, with poor economics not able to get loans, not intelligent enough to do basic calculations, just lazy or all of the above. Which probably mean that you are in the lower end of the society scale and could have used every single dollar of those energy savings.

If you wanted to look at one side of the coin you could say that SolarCity is the guy who helps you get your disability check when you can’t get it yourself but takes 50% of the money for doing it.

If you look at it from the other side then you see it as a company who wants to get as much renewables out there as possible while reducing the cost for people who wouldn’t have done that otherwise in a fast and easy manner where all they need to understand is that they pay less every month to sign it.

I believe that it’s the second part that is the front side of the coin and most prominent, but there is always at least two sides to every coint.

Someone needs to write a detailed article about Solar city: disadvantages, advantages critical cost analysis. All I know is I saw a friend of mine get an 8000 watt system for 100$/mo. It sounded too good to be true to me….and if it is too good to be true then there is some gotcha buried in there somewhere. So what is the gotcha?

It would be interesting to know more details about that deal. What’s included? Not included? What’s the time frame? etc.

“Now whilst many here are extremely keen on Musk, and he undoubtedly has engineering cred, having watched the way he operates I would surely count my fingers after shaking hands with him.”

LOL You need to get to know my friend Noel Park. He’d surely love that comment.

Speaking of fingers here’s a good OT story.

I had the pleasure of working with Germans on the Airbus A320 APU program and they had some chaps over here in the US.

They were pretty good with their English. but before we would head off to lunch he would announce that he needed to: “go wash my fingers” and I would always remind him to wash his palms also.

He may have been utilising his fingers and not his palms.

Why waste soap?

German precision! 🙂

If they came from Texas as you obviously do, of course they would have needed to wash their palms too!

That is the home of the longhorns, we hear!

No David Arizona not Texas.

German precision indeed.

I have a time-of-use electric plan in northern California and right now electricity costs $0.39 a kWh during peak usage and $0.10 during off peak times. If you assume a lithium ion battery is good for about 1000 charge-discharge cycles then using a battery for electric rate arbitrage here starts to look attractive when battery prices fall below $290 kWh.

I also drive an EV and charge at night and as long as I don’t produce more energy than I use during the entire year, I can sell solar power to the grid for $0.39 a kWh during the day and then buy it back for $0.10 a kWh at night to charge the car. Since this seems like a pretty good deal, I’m having a site visit from a solar installer next week 🙂

That’s great news, your timing is perfect. Solar panels are much cheaper than battery storage. So rather than just arbitrage the grid pricing, you’re a producer of renewable energy and get paid better to boot.

Check out the ‘Solar Bros’ the comments in my link referenced, which allegedly at least is a consortium of the little guys competing with the financing offers of the monsters.

I guarantee nothing, other than that there are sharks in the water, mind! 😉


I thought I read somewhere that the utilities in Ca were trying to make it where one could not install batterie backup in residential solar systems.

It look like they’re dragging their feet and charging high inspection fees rather than trying to outlaw the back up batteries:

Thx for the link.
Screw ’em. don’t get a permit for the batteries. Put the system in with all the necessary equiptment so you can add batteries later. Don’t use microinverters as I did. I wish now I had not gone with them as I can’t do batteries. So do it all above board with a permit …then add the batteries. The utility will never know.

I would imagine that that would invalidate your house insurance in the event of a fire.

Batteries are a fire hazard to a degree, and also give off highly toxic fumes in a fire.

Not only should the utility and your insurance company be kept fully informed, but so should the local fire brigade, as their guys might have to go into an environment made more hazardous by a large battery pack.

Meh. Nothing wrong with microinverters. They are much better when you have shading and make it much easier to install. But you can switch to a centralized inverter just by rewiring.

I just don’t understand why anyone would really want batteries though unless it is a remote off-grid cabin or they have so much extra money that they’ll spends thousands of dollars to deal with those few hours of the grid being down over the year.

I’m going to go out on a limb here (very daring, I know, for an anonymous poster in the comment section of a website) and say that the estimates are actually too low. The reason is that there are several compounding technologies that are working to make electrical power generation not just cheaper than conventional sources but effectively free. Already for about half the countries population (the American South-west and mid west coast) electrical PV solar power generation, on a levilized basis, is cheaper than any form of conventional power generation and the rate at which its costs are falling is actually accelerating. The expansion of solar power has therefore continued to defy annalists. Projections just five years ago questioned whether it would ever be able to take on the dominant share of power generation. Today, over 50% of new electrical power supply brought on line is derived from PV solar and that number is likely to go much higher as its cheapness makes the decommissioning of traditional power-plants (excepting those needed to maintain an acceptable mix for supply stability) becomes economically necessary. The above analysis shows that these new realities still haven’t been fully digested across industries. Take for… Read more »

‘Our proprietary model’
surely needs a bit more detail.

Who are you, and what is your interest on behalf of, or with financial interest in, what companies?

It is customary to list financial interests and professional obligations.


Um… Not 100% sure how to respond. That was actually a quote from the article! Rest assured I have no relationship with UBS!

I was merely (trying but not successfully it seems) to point out that their analysis has been overtaken by the facts on the ground.

I saw some quote marks, but lost track of who was who!
Fair enough.

Arizona is already decomissioning 3 out of 5 coal units at its four corners plant and 1 of three units that are at the Navajo coal plant near the grand canyon.

Those decomissionings are due to EPA regs on haze (not CO2).

I expect more coal plants to be shut down to meet the new proposed EPA regs on CO2 (30% reduction in CO2 required).

Beautiful! As long as no new ones are being built that is great!

I hope to hear of more coal plants decomissioned.

Good. I look forward to seeing them ALL closed down.

And I think that the US and the EU should put tariff on all Chinese goods & services until they reduce their coal burning. Coal is just terrible stuff from start to finish.
Mining: Black lung, mountain-top removal, stream damage, fly-rock, miner deaths from min collapses, strip mining, etc.
Transport: It is heavy & low energy density, massive amount of dust from open-air rail cars, etc.
Burning: Lead, arsenic, mercury, SO2, CO2, etc.
Post-Burning: radioactive ash filled with toxic heavy metals.

I’d like to see all coal usage end.

I think all this wonderful solar being cheap forgets that the production of electricity from coal or NG costs between 3 and 4 cents a kwh. Sure when you compare to $.39 – solar is cheap.

But it really isn’t cheap compared to coal and NG. While prices are falling, I’d expect parity to be well past 2020.

Mind you I have a PV system. Cost me $30k before subsidies and saves me $400 a year. Imagine that 50% of the price is waste and taking advantage of the subsidies. You still have a payback of never given the time value of money.

I had $24k in subsidies.

NC utilities have a rate plan that solar falls into which is logical but not nearly as generous as CA. 6.5 cents on peak, 5 cents off peak. Then a demand charge of roughly $5 per peak kw used in the month (battery charge based on max load). So even if you are net zero, your bill is hard to get below $40 a month. ($15 flat monthly charge).

Mind you $500 a year (see above post) for a very big battery is not bad. Even at $100 a kwh and 1,000 cycles, it would be hard to make work.

I’d certainly need 30 kwh and 1000 cycles might last 5 years. Or $500 more than paying the utility over 5 years. Even at 30 kwh, I’d have to run a generator in the winter at times.

and remember that the S batteries are only around 500 cycles.

So Tesla will have to decrease DOD and/or change chemistry

Tesla’s argument is that it can beat all competition on price, and still maintain high profit margins through high volume production of their battery system using it in cars and homes. Unfortunately the chemistry they use is not great for homes. It requires active cooling, which costs money, and part of the reason for using 18650 cells and assembling them is to allow adequate cooling. Their great advantage for cars is their high energy density. To do that they use cobalt in their chemistry, which is both somewhat toxic and expensive. It is also volatile, and was the element which made the Sony batteries catch fire. The Tesla chemistry uses far less cobalt, but it is still volatile and you don’t want that when it does not really bring anything new to the table. So Tesla can either mass produce an unsuitable and more expensive chemistry and format, or use a different chemistry for home units, which would obviate much of the advantage expected to accrue from mass production in vast quantity. BYD, backed by Warren Buffet and established in China with favourable access to their massive and rapidly growing electricity grid uses LiFePo, which uses only cheap, plentiful materials,… Read more »

What chemistry is being used in Solar cities backup batteries??

I have not been able to track it down for sure, but a Tesla fan reckoned it was the same batteries as in the Roadster.

Whether it is those of the ones in the Model S I still would not fancy that rather volatile slightly toxic chemistry in my house.

Tesla Roadster 2400 mAh LiCoO2 cells were rated at 500 cycle life.

Tesla Model S 3300 mAh LiNiCoAlO2 cells are rated at over 1000 cycle life


Yeah, I’ve been a little worried about an EV backlash happening if older Tesla roadsters start crapping out because they were built with batteries that were not really designed for longevity. They were just off-the-shelf PC laptop batteries AFAIK.

But I’m starting to not worry about that much since so few Roadsters were actually sold, they were mostly sold to super-wealthy people that won’t raise a stink about it, and we already have Leafs & Model S cars that have passed the 100K mile mark thus proving that modern automotive Li-Ions can do the job just fine without dying off too quickly.

“I think all this wonderful solar being cheap forgets that the production of electricity from coal or NG costs between 3 and 4 cents a kwh. Sure when you compare to $.39 – solar is cheap.” Well, my self installed solar PV system costs less than 6 cents/KWH. Oh, and that is with no subsidies. Now sure, coal is cheap at generation . . . but it requires a lot of money for transport and distribution. Since my solar PV is on my roof, there is no transport or distribution cost at all for what I consume. And for my neighbors that use my excess, there is still no transport cost, just a small distribution cost. “Mind you I have a PV system. Cost me $30k before subsidies and saves me $400 a year. Imagine that 50% of the price is waste and taking advantage of the subsidies. You still have a payback of never given the time value of money. I had $24k in subsidies.” Please explain how you got a PV system for a mere $6K? You say it cost $30K and you got $24K in subsidies? WHERE IS THAT AVAILABLE? I paid $13K and self-installed. I’ll get… Read more »

the elephant int the room nobody is talking about is the 16-24KWH battery pack with 4 wheels….. I want a cheap Leaf to Home for either my Leaf or iMiev…. that 40KWH could power my whole home for a few days and my cabin without the need for the grid ALL the time. Add some cheap solar panels and off we go!

Are you suggesting I do an in depth study of the UBS piece after you so well summarized it for us.?? 🙂

That perhaps I should READ the reference instead of just shooting from the hip and flapping my mouth?

Very good points I must admit Mark 🙂

I will try to study it today.

one of us should write an article about this movement by the utilities to stop net metering and also in relation to the battery controversy of Solar city vs the utilites.

Jay has my email you can get. since it’s OT.

electric cars are already doing well without subsidies in luxury car category. This is why EV subsidies should be directed for the rich 1%. Electric cars should have today more than 80 % market share among luxury cars, if incentives were properly assigned.

I am thinking plug in vehicles sales and PV solar will really start taking off once the economies of scale kick in. It may happen faster then anyone is thinking or forecasting.

I have 4 kw of solar, 20 kwhs of AGM batteries, and a Focus Electric and currently I am able to disconnect from the grid for about half of the year without a backup generator. I don’t net meter. I give extra electricity away in the summer and buy a little in the winter. I have an all electric house and winter days are shorter and less sunny.

I can imagine may other people doing the same thing as prices drop. Anywhere down that doesn’t need much heating can disconnect from the grid today, year round.

You should double the size of your PV array. Solar PV is damn cheap.

I think a lot of this analysis by these financial people is REALLY BAD. They may know their finance numbers but they really don’t understand engineering. There is pretty much NO NEED FOR STORAGE with PV until you start hitting very large levels of penetration (or you are building a remote off-grid cabin). The fact is that we use most electricity during the DAY and at night we have MASSIVE amounts of excess generation capacity. The only issue is the evening peak when the sun is going down and people are cooking up dinner and watching TV. But that can be handled with dispatchable hydro, dispatchable biomass, peaker plants, demand-response, high price rates for that time, CSP with thermal storage, etc. But really high electricity rates in some areas may actually start causing the ‘utility death spiral’ because some people might abandon the grid if prices get too high and storage & PV prices get low. Germany, Hawaii, Australia, and other places might push people to get off the grid if the grid prices are really high and they can get by with solar PV plus storage for less than the cost of grid electricity.

The trick is to use your EV as the storage so you don’t need the battery back up for your PV.

Here is a situation:

Drive your EV to work and park under a solar array while you are there.

Drive home with your charged up car that has some battery to spare and plug in your house.

It’s not V2G
It’s V2H

The utilities should love it. 🙂

The problem is that “V2H” will void the Tesla’s warranty for the car battery. So it is better that you just buy separate storage battery, because they are cheaper than car batteries.

You know, that the cycle life of electric car batteries is very limited. And this is the reason why e.g. Tesla does not allow feeding electricity from the car battery.

Solar arrays over car parks in workplaces really make sense.

Having the power where it is needed when it is needed avoids all the expense and losses of transforming the power, which needs converting at both ends.

Just the passive cooling keeping the cars in the shade reduces load.

Although it is true that around 70% of the US light vehicle fleet could run on the grid without major new build of capacity, if those cars are mostly charging at night that would happen by increasing the fossil fuel burn at existing plants.

Hydro and nuclear is kept running whenever possible already as baseload, so if the overnight demand steps up it has to come from keeping the coal and gas plants running more hours.

That is great for their costs, lousy for their CO2 emissions.

On the GTE under discussion charging at work would also mean that many more people would cover most of their miles on electric using this very modest pack.

Doing almost all your running around on electricity with a tenth of the battery pack size of a Tesla whist still having much larger range and hassle free refills sounds good to me.