Tesla Battery In The Model S Costs “Less Than A Quarter” Of The Car In Most Cases

AUG 9 2013 BY JAY COLE 73

Whenever there is a Tesla quarterly report – such as the recent Q2 profit of $26 million (ex-items), we get crushed by facts and figures:

  • margins
  • production
  • ZEV credits
  • outlook
  • Model X plans
  • Gen III Car plans, etc., etc., etc
Elon Musk Takes The Stage To Demonstrate Tesla's 90 Second Battery Swap Earlier This Year

Elon Musk Takes The Stage To Demonstrate Tesla’s 90 Second Battery Swap Earlier This Year

…and if you are into that sort of thing, Tesla CEO Elon Musk discussed a lot of those topics during a Q & A with analysts (which you can find here)

Which means we have been so busy with Tesla numbers that we almost missed a test drive of the car by the MIT Technology Review that had some really interesting info.

Actually, we did miss it – but our good friend and reader Rob didn’t.  He also noticed a comment from Tesla’s chief technology officer, JB Straubel that gave us an answer to a subject that was not well known.

Specifically, what the heck is the cost of the batteries found inside the Tesla Model S?  And can they really afford to use this small format technology to power a $35,000, 200 mile car sometime around 2018?  The answer is – apparently they can.

By most estimates, the battery for the Model S that I drove should cost between $42,500 and $55,250, or half the cost of the car. But (Tesla Tech Officer) Straubel indicated that it is already much lower. “They’re way less than half, actually,” he says. “Less than a quarter in most cases.”

Straubel says more can be done to lower batter costs. He’s working with cell and materials suppliers to increase energy density more, and he’s changing the shape of the cells in ways that make manufacturing them easier.

Tesla Model S Batteries Not So Expensive After All

Tesla Model S Batteries Not So Expensive After All

As a point of reference, the Model S lineup (non signature) ranges from $71,000 for the entry level 60 kWh car to $81,000 for the standard 85 kWh version and another $10,000 for the P85 (85 kWh Performance Edition).

Using the “most cases” reference from JB Straubel, that would most likely mean that the standard 85 kW version Model S would be a safe bet to have battery costs at “less than a quarter” – that translates to a total maximum cost of about $20,250 or $238/kWh.  Pretty cheap.

So how much would it cost to power a smaller, 200 mile entry level EV from Tesla?  We estimate it could be achieved from around 50kWh seeing how the 60 kWh version of the Model S is rated at 208 miles by the EPA. The third generation Tesla will be a much smaller, lighter and we assume more aerodynamic proposition.

50 kWh of lithium power would only translate to a maximum of $11,900 in costs…still plenty of room to still build out the rest of the car.

MIT Technology Review – hat tip to Rob

Categories: Battery Tech, Tesla

Tags: ,

Leave a Reply

73 Comments on "Tesla Battery In The Model S Costs “Less Than A Quarter” Of The Car In Most Cases"

newest oldest most voted

Battery cell cost vs. pack cost?? Important distinction?

Not with a rational car maker. The more reluctant obtuse car makers might find a way for the packaging to add substantially to the cost. Or at least lie about it as a convenient excuse to not do more EVs.

That’s very interesting. The $238/KWH figure is very, very close to what some others have been speculating recently as a cost for battery cells. Actually Straubel says “less than a quarter” so I’m guessing $200-ish. And that’s here and now. The actual Blue Star isn’t due for another 3 years according to Musk, so they have some more time to finesse this.


Most certianly by 3 years these batteries will be at least half what we pay for them today. ($100 kwh)

Oh, we can’t say that. 100$/kWh is extreme discounting. Doesn’t take into account where monetary conversions will go, demand constraints, etc. Let’s estimate a 20% discount at best. 8% a year for raw batteries is a reasonable discount and cost of materials for packaging, shipping and computer circuits will not drop until huge costs of scale decreases are scaled in (50,000/yr).

Cost for batts for Gen-III may be 170/kWh. Other car makers will be making similar sized BEVs by then too. Tesla will be struggling by that point.

Why would Tesla be struggling at that point? All of the competition is using large form-factor cells that cost 2 to 4 times as much as the modified commodity cells that Tesla is using. The competition is hopelessly behind in terms of pack costs.

I believe ford is using the exact same cells as Tesla in the energi vehicles. May be a sign of things to come for them.

[citation needed]

Telsa is almost certainly using cheaper cells, but that doesn’t automatically translate into a cheaper (or better, or whatever) battery pack. Putting together and properly managing thousands of cells is more costly than fewer, larger ones.
Among other considerations, it’s also likely to impede diagnostics and repairs, if ever needed.

While Ford plans to use Panasonic batteries, those would be large, prismatic cells. Tesla remains the only manufacturer which chose to clump together 18650s.

Agreed, there’s no inherent advantage to using lots of 18650 cells in the long run so we can assume that the reason large format prismatic cells are being used is because they will end up being cheaper. This seems logical to me.

There are several, and Elon Musk has outlined them in recent interviews:

a) superior thermal management;
b) superior pack reliability (if a few out of 7,000 fail, there is no measurable change in performance);
c) superior packing density; and
d) COST.

That’s something JB Straubel has emphasized in interviews. They use 18650 because it meets their needs and gives them the best value. When they find an functional alternative that provides better value they’ll change.

A wild guess: Tesla produces sports cars and since his pricing at the moment creates a hobbyist market, his users won’t give his cars heavy use. This means that he can design his batteries for reduced extended battery-life; while Volt et al need their batteries to last 10 years, Tesla only needs 5, in which case, he can scrimp on expensive batteries.

And in the event that his end-users end up ruining their batteries, Tesla can afford to pay the warranty; most of the users won’t use the batteries as heavily as expected, and Musk ultimately has Tesla as a pet project; he can afford to use money, something a more commercially-oriented business would not be able to do.

Tesla has already worked all of that out, a long time ago. Anyone who wants to switch will have to learn it all from scratch.

Dr. Kenneth Noisewater

“Cost for batts for Gen-III may be 170/kWh. Other car makers will be making similar sized BEVs by then too. Tesla will be struggling by that point.”

LOL, where’s the proof? The BMW i3 has had years of development and what is its energy density? ~100Wh/kg, just like all the other plugin EVs that use lithium batteries besides Tesla. By the time other manufacturers catch up, Tesla will either have reduced costs or increased densities.

Of course, maybe the OEMs have been playing next-gen development real close to the vest, and they have 400Wh/kg chemistries, but at the moment Tesla is a generation ahead in battery development, has its own patents, and nothing I’ve seen publicly makes me think the legacy carbuilders will catch up short of those next-gen batteries..

I agree with that number of $238Kwh. Having said that I wouldn’t be surprised that Tesla buys these batteries for a good round figuer of $200Kwh

“We estimate it could be achieved from around 50kWh seeing how the 60 kWh version of the Model S is rated at 208 miles”

Meh, just keep it the same size. Better for commonality, and the weight difference will not make as much difference in steady state expressway driving. I don’t think there’s much room left for aerodynamics improvements, but who knows. (skinny tires :))

Truth be told I was thinking CdA (multiplication of the Cd value by the area) when we said “we assume more aerodynamic proposition” for the 3rd gen.

…but I didn’t want to ‘muddy the waters,’ as I don’t think a lot of casual readers follow the terminology.

Fully agree with the Model S Cd is about as good as it gets…but that frontal area is another thing, (=

Yes Cda, that’s why I suggested skinny tires (see BMW i3). And they could also do things like active grill management, and lowering the suspension at high speeds, as long as these don’t add too much cost.

It will be interesting when we get the specs on the Model X. That thing has a much larger Cda from what I can see. How much range are they going to get on a 60kWh battery?

For now, we know for sure is that the battery packs will be the same as the Model S: 60kWh and 85kWh.

Also looking at the head-on, side-by-side profiles on Tesla’s website, we also know for sure that the Model X is higher off the ground, and it is quite clear that CdA is much bigger than the Model S.

I would guesstimate a range loss of anywhere from 10% to 15% for a comparable model (60 vs. 60, 85 vs. 85, AWD vs. AWD, etc.).

And to be even more precise, I assume you mean the W (width) in the A. The 3rd Gen will likely not be lower than the Model S, but it will probably be narrower. The S is very wide.


Weight does still matter and so does tuning. Look at the improved efficiency from 85kwh to 60kwh. I had come to the same number as Jay, 50kwh. Perhaps Tesla chooses not to make a third size but looking at the S battery, they may need a different battery casing for Gen III, regardless. The current pretty much stretches from axle to axle and I assume Gen III will need to be a shorter wheel base. Perhaps denser cells will allow a common pack size for both models that is a little shorter than the current generation but how will that affect swap?

It is generally assumed that the GenIII and the next generation of the Model S/X will use Panasonic’s 4.0Ah cells. This could allow for a 52kWh battery pack that would probably scale in size to meet the GenIII expectation of being 20% smaller than the Model S/X.

Although 50kWh is roughly twice as large as the 24kWh LEAF battery. With double my range in the LEAF, I would still only hit a 140 mi range max. Far from 200 miles.

What year is your Leaf? The 2013 one I tested I had no problem reaching the 90+ miles.

And yet the Spark EV almost got 100 miles with a battery smaller than the Leaf.

…with a significantly smaller and lighter car.

Well your personal hyper-miling doesn’t count. It is the EPA rated numbers that really matter and reflect more typical driving patterns.

Maybe, but I wasn’t hyper-miling, I was driving the way I always did and did a good stretch of highway at max speed.

I understand why the EPA rating starts from a not full battery, but I don’t agree with that practice.

By that logic, the 60kWh Model S would only get 175 miles (actually 187 – the Leaf gets 75 miles, not 70). Yet it gets 208 miles. And that’s with a larger and heavier car.

It would be @50kWh usable to get 200 miles. 40kWh in the S nets 145 miles, EPA rated.

Model S is ridiculously heavy. Reducing that weight will give more range pr kwh

The Leaf’s major range inconsistency is due to aerodynamics. But it’s not a long-range vehicle so Nissan focused on utility.

Tesla builds a long-range car so make it aerodynamic (see Model S) and get better range.

Great article Jay:-)

I really think battery costs are going down faster than we imagined. Especially for Tesla. Compare this price to the pack of the BMW I3. That would mean 22kwh*238= $5,236 for the I3 pack. I don’t believe BMW get’s it that cheap. That’s for me another reason to believe that Tesla is way ahead of the competition.

Cheers, Rob

By sticking with modified 18650 cells, they have smoked the competition in terms of costs as well as thermal management and reliability.

Actually LGchem pouch cells cost less than 200$/kWh.
But it’s possible that they gain some fire safety with those metal cases. Not quite clear.

Tesla says that they have superior thermal management for several reasons, some of which due to the small cell size – they are able to keep each cell sufficiently isolated that even when they force one to ignite during testing, it does not cascade to neighboring cells.

This is certainly good news. If the cell cost could be that low, just $238 per Kwh, then a plug-in hybrid with 8Kwh should only cost around $2,000. Which means that vehicles similar in function to the C-Max Energi shouldn’t cost all that much more to build than a regular hybrid using traditional NiMh batteries. And a Chevy Volt battery shouldn’t cost more than around $4,000.

I think even if these prices aren’t available right now to most manufacturers, I am sure they must know this is going to happen. And they’d have to be stupid not to realize that at that price or less the electric car or plug-in hybrid makes sense to just about everyone.

Those prices are not available to the competition because they are all using various customized, large form-factor cells. These cost anywhere from 2 to 4 times what the modified 18650 cells cost Tesla. The competition is hopelessly behind in cost.

That’s an interesting assessment, Nissian’s whole reasoning for going to a larger battery is that is costs less to make a smaller number of bigger batteries than to make a lot of small ones. Granted because their batteries are a different shape they probably had much higher initial tooling costs but now that they have spent that money I am sure their prices will come down pretty quickly.

Current battery pricing has dropped about 40% since 2010. Which brings the 24kWh battery from 638/kWh or $15,312 to $383/kWh or $9,192 for a 24kWh pack.

That $6,120 battery price drop is why Nissan was able to drop the Leaf price by $6k.

So the 265 EV mile Tesla 85kWh pack would cost more like $32,555. But that’s not what they plan to use in the cheaper car. It would be the 208 EV mile 60kWh pack that would cost $22,980 today.

Prices don’t drop quite that fast unfortunately. Maybe 20%
Some batteries like chinese lifepo cells have actually risen slightly which is very unfortunate as they were already very expensive.

50kwh in my iMiev would get me, 50/16 * 62 … just over 190 miles range (perhaps less if we add some kind of weight penalty). Which, actually sounds sort of meager if the the proposed Tesla Gen III will get more than that. I guess that’s a testament to how good Tesla’s battery technology, drive train efficiency, and aerodynamics are compared to some of the other EV technology out there. Of course, that’s just conjecture at the moment. Perhaps Gen III will be more like 170 EPA miles (which would be FINE by me) with such a battery pack.

I kind of wonder why the 41kwh Rav4 doesn’t do better than 103 miles range with the Tesla pack. It must be primarily the wind resistance on such a large profile vehicle. It makes you wonder how much fuel/energy we could save just by lowering our vehicles, shrinking the frontal profile, adding some rear wheel covers and a teardrop back.

I agree.. Honestly I believe 150 miles with decent charging infrastructure is good enough to ensure people will essentially never fear running out of power even in large spread out cities like I live in (Dallas/Ft.Worth) and is good enough to consider taking trips to Houston or Austin, as long as there are 2 supercharging stations in between. Granted, with the Volt I can make a non-stop trip from Dallas to Houston, but I have never done that. I always stop somewhere along the route for a bathroom break.

Personally, I need to be able to drive 70 miles to a destination, and return on a single charge. I don’t want to have to rely on a charger at my destination. I don’t want to eek back with only 5 miles of range, and i also want a buffer for cold weather driving (Michigan). 200 miles AER is the bare minimum I could accept. Preferably, it would have 250.

I remember driving though the Upper Peninsula of Michigan and noticed that there where some small towns that where easily 100 miles between with no where to stop at. After that I trip I sort of wondered how would the EV’s be able to deal with keeping those towns linked in that where nice places to visit. But if I had a EV and wanted to go up there I would at least want a 200 to 300 mile range in case I got lost or had to take a different root or their was no super charging station and had to use a hotel to charge up at. Also there was one highway in Alaska I remember driving on that was the Dalton Highway that had a spot with a 220 mile and a 130 mile openings in it with no buildings or places to stop at. I’ve always wondered after going on that road if a electric car is able to drive up along that highway and stop at the existing stops on it which are half the time solar powered. A electric car that is able to make that trip would spell the doom of the gas… Read more »

I could live with a 150Mile BEV today with very little charging infrastructure. The radius my wife has around our home is about 30 miles and my longest commute is 70 miles with plug at the other end. We really don’t need the “Tesla-style” infrastructure if businesses and parking garages would get on board with the EV movement. The Tesla solution will eventually fall apart since either they will eventually have to charge a price per kWh or only offer it to the Model-S buyers and not the Gen-III. Home charging will always be 90% or more of EV infrastructure.

Huh? Why would they have to charge for the superchargers? They all will have solar panels, so they will generate electricity whether or not anybody is using that charger. The superchargers are also going to have battery storage, so they can store the solar energy and buffer the charging load to the grid. The superchargers should not be a significant financial burden, and Tesla management is adamant on the fact that they will be essentially revenue-neutral.

I agree, this makes little sense, especially given the later realization that 90% of charging we be done at home. I would also add that Tesla isn’t paying rent for the locations. There is very little running cost with the stations. A bigger question is: can they scale sufficiently to support 100,000+k new potential users per year. My guess is if they can fund it sufficiently now and charge times continue to improve as they say they can then scaling up shouldn’t an issue.

Note that Elon has said only Model S owners get free electricity. Everyone else, including competing electric vehicles, will have to pay for the electricity. Tesla’s valuation can only be supported with a significant cost reduction in battery cost. Note also that Tesla is investigating metal-air batteries – hint: they do not see lithium-ion costs coming down to the level necessary for market success with the III.

“Home charging will always be 90% or more of EV infrastructure.”

Tesla’s aim is to master cell and battery technology to create cheap large batteries with very fast charging capability and to build a national ultra-fast charging network. If they have the lowest prices, the best charging rate and a national charging network in place it becomes very hard for other manufacturers to compete. Right now, nobody else is even competing in their space. If it takes 3 years to get a car to market, that’s 3 additional years of Tesla manufacturing and global Supercharger construction against which they’re competing.

Tesla is already charging for the Supercharger network by charging customers $2,000-$2,500 up front so the financial aspect isn’t a big deal, especially when you consider that the planned solar offset should get cheaper per Watt over time. What’s more important for the network is increasing the charging rate to increase the supported volume.

The RAV4 does do better than the EPA 103 miles: the EPA is now averaging the results of the standard and full charges to give a single number. (This also affected the 2013 LEAF which would have had a rating of 84 miles if calculated as the 2011 LEAF was for 73 miles at 100%.) I believe the EPA number for a full charge on the RAV4 is 113 miles, though owners are saying they get more than that at highway speeds.

But still, yes, the RAV4 isn’t as aerodynamic…

Why are lithium battery so expensive? If I understand well, to get a 1 kWh battery, you only need 0.3 kg of lithium (according to Wikipedia). Lithium cost around 6000$ per ton, or 6$/kg! So you need 2$ of lithium for each kWh… Where goes all the rest of the money? Is it in material? Or is it only for manufacturing? If it is the second, I think will see a price drop dramatically has the market is growing!

Cobalt was the biggest cost in traditional Lithium Ion battery chemistries (60% of total cell cost including labor, plant etc.). I don’t know what the current situation is but cobalt is expensive and significant, lithium is pretty much irrelevant. Nissan chose the lithium manganese spinel technology mainly because the material costs are *cheap* – it might not be the most robust technology but it was good enough when considering longevity, performance and cost.

Cobalt – $25,000 per ton

At least they thought it was robust enough.

I think the average price of a Model S is the 85kwh version with some options, which adds to to price. I would be surprised if most people where buying the car with no options.

Great example of reverse engineering numbers. And even better it results in good news.

I’ll be most interested in how the market dynamics play out in the next few years. Greater range and lower prices for EVs will mean broader public acceptance (thanks also to increased awareness that EVs are “real cars”, etc.), but it will also force some companies (cough Toyota cough) to get off the sidelines and bring out a Yaris or Corolla or xD EV, for example.

We are getting ever closer to a multiple, interconnected tipping points, and when they flip we’re going to see vast portions of the car buying public in the US and other places suddenly looking at gasoline-fueled ICE vehicles as noisy, smelly, expensive dinosaurs. Hang on to your hats, people; it might take another 5 years, but when these declining battery prices reach a threshold level, it’s going to get VERY interesting and VERY disruptive.

I agree Lou. I’ve been saying for awhile now, the mainstream mid-sized sedan or crossover that can be offered as either a PHEV, EREV, or total EV, and offered at a small price premium over a gas-operated version, will be a game changer. These battery cell prices getting lower and lower are one of the necessary steps along the way.

Ford already sees that in the luxury segment – they sell the hybrid MKZ at exactly the same price as the ICE version, and the proportion of the hybrid sales is many times that for all other models that have the price premium. Ford keeps increasing the percentage of hybrids in production in order to meet demand (last I recall, Ford was raising the hybrid MKZ production to around 30% of all MKZs).

Unfortunately for Ford, that’s a higher percentage of low sales.

I guess the game changer is when Tesla starts building their own batteries. They have the space and the money. Google search Winston Battery Limited. Buy them out!

Sometimes it’s cheaper to let another company make the products for you. Why buy an entire building and manufacturing center when you can buy the batteries (for a bit more than you can make them) without having to amortize the costs up front?

It is even better to force a supplier to build a factory right next to your own for JIT supply. Push the capital risk on them and eliminate the logistics time and cost.

Interesting that the cost of the battery is 25% of the car, which is also the profit margin on the car. So basically you are buying (2) batteries.

And the Tesla buyers are saying they are doing so to save money 🙂

I find it difficult to believe that the small 18650 format is cheaper to build than the larger pouch style used by other auto manufacturers. This is only because of high volume of the 18650 format. Now that Tesla and other manufacturers are becoming the dominant market for lithium batteries, I expect the economies of the pouch style to become cheaper than the 18650. Also there are other chemistry/technologies that could exceed Panasonic’s in the future. I wouldn’t count on Tesla staying with the small format many more years.

Panasonic continues to work with Tesla on improved chemistries. Tesla will not fall behind so easily.

Additionally, the 18650 is well-known and has huge manufacturing scales of economy, has excellent packing density per kWh, is easier to control and isolate thermally, and allows for better battery pack reliability (if a handful of cells fail out of 7,000, there would be no difference in performance).

The 18650 has so many advantages that Tesla will not deviate until something better comes along that is ready for prime time (in other words, no changes any time soon).

Elon talked about this during the Q&A. Think failure rates – and you know why small cells may e cheaper.

All I have to say about the article is, “well, duh!”

I’m glad to see some concrete figures. The costs for the entire battery pack being around $230/kWh is consistent with what I’ve read and with my crude estimates that I’ve posted elsewhere.

I wondered how many times I would have to post a link to that Green Car Reports article before someone on this site made their own investigation. 🙂

As for the costs of the battery I think Tesla is keeping the bulk of the profits they are saving from the dropping costs of buying and building the batteries to shore up their finances. In that though out last year and the last few years of their history they where burning though cash left and right buying up parts for the cars and the factory and training and adding workers. Another thing about the $72,000 dollar Tesla model S is that there are a lot of car dealerships out there that sell $80,000 dollar cars. In fact we have this one street in our town where we have a Porsche dealership a Lexus dealership and a BMW dealership along with five others. They all have $80,000 and $120,000 dollar luxury cars but a lot of them are still gas powered and besides from a few gizmos and I phone things in side of them they are still like regular gas powered cars. At least with Tesla you are getting a futuristic car with special abilities with it being a electric car with tons of futuristic features on it. In that if I want to spend $100,000 on a car… Read more »

It’s not Tesla shoring up finances, it’s just part of Tesla trying to get to a 25% gross margin on the Model S so they have solid long-term profitability that allows them to fund development.

Only once/if they get Gen 3 out profitability will they be able to consider reducing margin.

There could be a bit of a problem with Tesla making their own batteries. If you remember, one of the problems Preston Tucker had, no one was willing to sell him steel. I think that if Tesla moves too far, too fast to shorten their supply chain, there may be an organized push-back from suppliers. Sure, I’d love to see train loads of raw materials go in one side of the plant, and finished cars roll out the other, the plant is big enough. But sometimes you have to feed your opponents, otherwise they might eat your dinner.

What total sloblock.

Tesla buys cells from Panasonic, and is also looking to Samsung. Considering that a successful Gen 3 using 18650s would require more cells than the entire current output of the laptop industry and that LG is willing to take a short-term loss on its cell manufacturing for GM should tell you how much cell manufacturers are drooling at the potential of PEV.

Tesla has done amazing so far, I believe they are able to keep the pace of development.
Progress and an evolution, more sales the better. / performance ratio will improve for the whole ev industry.
We have Tesla to thank including making the Volt possible.
It’s all good !