Tesla Leads The Way In Cheapest Battery Pack Costs

Tesla Model 3

SEP 4 2018 BY MARK KANE 76

Tesla’s battery cost advantage is expected to last for (at least) several years.

According to Bloomberg New Energy Finance (BNEF), Tesla and its lithium-ion battery partner Panasonic are the leaders in EV battery technology, especially in terms of costs of the cells and packs.

One of the reasons is low cobalt content in the cells (below 10% of cathode weight). Elon Musk said in June that the target for battery cell cost in 2018 is $100/kWh, and $100/kWh on the pack-level within two years.

In fact, Tesla already delivers the car with the cheapest cost per kWh in the form of the Model 3.

BNEF’s research revealed that other suppliers offered cells for $120/kWh in 2017, but to reach $100/kWh on the pack-level is in general not expected for the industry until 2025.

Anyways, the lowest battery costs gives Tesla an edge compared to other electric car manufacturers and BNEF expects that the advantage will carry on for several years.

β€œIf Tesla reaches its pack-price milestone, it will be several years ahead of our industry benchmark,” BNEF said in the report. The researchers noted that others made batteries for as low as $120 per kilowatt hour in 2017, β€œwhich suggests that Tesla is not alone in being ahead of the curve.”

Well, having cheaper batteries will definitely help Tesla to grow quickly in an increasingly difficult market where competitors are introducing long-range electric cars.

Source: Bloomberg

Categories: Battery Tech, Tesla

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76 Comments on "Tesla Leads The Way In Cheapest Battery Pack Costs"

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Another reason Tesla stock should be much higher.
It’s amazing the shorts can push this stock around so much.
$288, an incredible bargain price, way below the 200 day moving average.

GS came out with an article that Tesla will drop 30% due to the coming competition, which is just total B.S. but then it does have an effect on the stock price. I think also analysts are disappointed with the slow ramp up of production and other detritus from the going private snafu. It should bounce back in a few days.

It was Goldman Sachs that predicted the 30% drop. It was also GS that did NOT get the job of finding investors, since the privatization was blown off. And neither does it earn money by lending more money to Tesla, since Tesla says it doesn’t need more. I think GS is trying to force the stock down, which will make Tesla more cash strapped (because old loans cannot be converted into stocks if they stay under 360 $ in november and march), in the hope that Tesla will take up more credit, which is the business of GS. This sounds a bit conspiracy-like, but in the past you could see the pattern: if GS was implicated in credits or stock offerings, they had buy-ratings on the stock, if they were left out they had sell ratings.

Having the CEO lie so blatantly about funding secured is more than a snafu. If the stock stays below $200./share Elon will have to sell much of his stock to satisfy bank loans.

The real reason is to shake out nervous investors so that they can buy shares more cheaply. It used to happen to Apple every quarter. If GS really believed Tesla shares are about to drop by 30%, why do they still hold 1,005,839 shares in it worth around $300M? Are they intent on losing $100M in a hurry?
GS are at the heart of this game of shaking the tree using fear to push retail investors and others to sell and run for cover. GS then shuffle in calm as you like and sweep up all those abandoned shares on the cheap. A pure, cynical, LOSE/WIN game.

Google ’20 largest investors in Tesla’. Goldman are right there.

Exactly, I agree that competition is coming, but then I see the specs on the competition, like the 2020 EQC and see that MBs costs will be higher than the Model X yet the specs are 5 years behind. They can’t sustainably compete. Really, they are a generation behind at least. Tesla will own the market through 2025 at least, probably longer.

As usual, the competition is still a decade behind Tesla.

I do not mind seeing this drop a bit. It will embolden the shorts. It will also encourage a lot more buying. If it hits 250, we will buy a load more.

The fallacy in you’re logic is that stock price should follow the company’s performance.
Stock price is dictated by investors buying and selling stock. Period.

Below $300 is the time to buy.😊

But stock price is used as a major indicator of the health of a company – a highly-shorted stock, a volatile stock, etc., scare away some normal investors. They assume that the experts know something is wrong, and they don’t want to get stuck holding the bag.

Tesla fans can’t lose ,the lower the stock goes, the better to buy some, just wait.

With these other auto manufacturers finally releasing EVs, it would be interesting to see how much of the powertrain is outsourced to companies like Bosch and LG. The Bolt, for example, is mostly LG electronics (battery and UI) inside a GM shell and as such costs GM a fortune. Same story for the Fiat 500e but with Bosch instead. (And of course with the small orders being placed there’s no incentive for the battery makers to really push the envelope). The implication of this, of course, there’s currently no opportunity for a non-Tesla company to break free from the pack (no pun intended πŸ™‚ ).

It could be Apple vs Android all over again. Tesla vacuums up the profit share while everyone else fights over the remains because they all share common components. Hmm is Samsung working on a EV? (They’ve got their fingers in pretty much every other industry….)

That’s not a Samsung product in any way beyond the name AIUI.

Since 2000, the French carmaker Renault has 80.1% of the shares. Samsung has what’s left.

This Samsung SM3 is the Korean version of the Renault Fluence ZE which was an adaptation of the petrol Fluence which is also derived from the Megane III. Really not a car to remember.

Ah, a punanalogy.

I don’t think so. Actually Tesla and Panasonic seem to be geting into marger-kind-of-relationship, and race goes on for the go-to-suplier for the rest od auto-industry. CATL and LG Chem seem to be leading the pack(pun intended πŸ™‚ ) with very impressive plans (hundred-ish GWH/yr production in next 3-4 years both). Difference with Apple/android is three are significant effects of scale (Like in software) but also significant entry costs(unlike software) so the early entrants might ultimately be the last ones.

“bout time Samsung got into BEVs you’re right or at least the drivetrain parts and Ui just like LG ,lots of money to be made

This is what the late FCA CEO Marchionne fretted about: loss of core technologies to suppliers, a process he called disintermediation. Probably one of the reasons the idea of EVs isn’t all that popular among the incumbents, though Tesla shows things don’t need to be that way. OTOH the “LG” Bolt might show that GM has already accepted the disintermediation inevitability, though it might decide to do more in-house once it decides to take things beyond compliance.

Hmmm, automotive can and pouch cells cost $90 per kWh in China on commodity markets. Great Tesla is building 2170 in US with Automation to get to this price, but the cost is not spectacular and not market leading…


Antrik, I’m in the market and run a business making technologies in the space. Cell contracts for 240ah in China range from 90-100 USD/kWh… This is not a state secret, contact CATL and if you are a volume mover, you will get similar.

I was hoping for something a little more definite than “trust me I know”, considering that it’s a pretty outrageous claim, which if true would expose all analysts as totally in the dark, all major car makers vastly overpaying…

Phil the shill? Always smart never to trust anonymous claims on internet forums.

Just to be clear, I’m not accusing him of lying. Maybe it’s some sort of misunderstanding. Maybe there are some special conditions that make it true but not representative. Maybe these are just some leftovers of obsolete cell types. Maybe they are actually that cheap, but technically inferior in important ways. Maybe it’s some sort of scam. Maybe it’s indeed true, and the rest of the world has no idea… I’d just love to get some more solid info on this.

Phil, I hear you about cheaper cells being out there, but I wonder what kind of quality they are compared to Panasonic/Tesla. Tesla cells seem to last a long time and tolerate fast charging pretty well. I wouldn’t bet any money on a Chinese cell being as robust.

Tesla has the lowest cost, highest quality batteries on the market.

True, but the $20 cost advantage isn’t the factor that counts. It is that Tesla is willing, and capable, when it comes to installing them in cars. That is what is singularly changing the entire industry.

Not all li-ion batteries are created equal. And not all have the characteristics appropriate for EVs, especially not the high energy density that Tesla’s cars demand.

Not to mention which, the quality control of such things as electronics and battery cells from Chinese manufacturers generally (not always, as Apple has shown, but usually) ranges from mediocre to outright fraudulent use of counterfeits.

The difference is that Tesla’s/Panasonic are SUPERIOR to the garbage coming out of China.

BYD hast higher energy density. Is it garbage? Will See.

They do? Since when? And where did you hear that?

Cue crickets…

BYD has higher power density but much lower energy density.

Supposedly their newest generation of passenger cars switched from LFP to NMC — so more typical in terms of power density and energy density I assume…

So much sinophobia in this one…

Ask Buick about quality. Buick had to delay its hybrid and electrics in China because the Chinese batteries didn’t meet spec.

Shame on GM for being lax about quality control.This article is pretty accurate,Tesla panasonic are leading but only by a little, they may pull further ahead or fall back to the pack.Tesla being $100 cell level now means $160 pack, their goals mean exactly zero as those are the same timeline Elon uses for Mars landings.Go BFR!!(To the Moon).

100 $/kWh at cell level doesn’t mean 160 at pack level. Nobody I’ve ever seen, not even the most pessimistic of analysts, ever suggested such a high markup for packs.

GM isn’t making the cells.

Those 18650 (or similar) Li-Ion batteries coming out of China are almost always fake. There are many articles on the web, including YouTube videos showing this. They advertise them as having double or something quadruple the actual capacity and sell them that way. They are also inferior chemistry and prone to catch on fire and have a lifespan of 1-2 years. Tesla would be committing suicide if they used these batteries in their vehicles.

China was / is so behind in battery tech the Chinese gov’t had to allow Samsung and LG to produce batteries in China without having to partner or JV with a Chinese counterpart like foreign Auto has to

Not accurate rey… The confirmation bias on this page is unreal…

They can produce all the batteries they want — but they are excluded from Chinese EV subsidies — so they have production capacity now, but nobody to sell to. The Chinese government screwed them over big time on this.

Who actually owns this leading-edge low-cost cell chemistry and the related manufacturing techniques- Tesla or Panasonic? This is what has the value at the cell level.

Tesla does have a few battery cell patents related to the physical configuration of cell interiors, but I think in large it’s mostly Panasonic. Tesla has a sophisticated battery cell analysis lab, and tells Panasonic exactly what it wants, but it’s Panasonic which is doing most if not all of the R&D to develop year-to-year improvements.

But I wouldn’t say it’s all Panasonic; the partnership between Tesla and Panasonic is not a zero-sum game.

The chemistry or the machines? The chemistry is supposed to be Tesla’s. BUT the machines are absolutely Panasonic’s.

Panasonic owns their chemistry and they have some of the highest Whr/kg in the industry. It is not reasonable to directly compare kWh without considering density i.e. per kg. These low prices for commodity cells in China would be at half the Whr/kg and therefore if you tried to build a 100kWhr pack with them it would be twice as large as Tesla’s version.

h = hour/hours. Wh/kg.

“Panasonic owns their chemistry and they have some of the highest Whr/kg in the industry.”

True, but the Tesla cells have content from both including the chemistry.

An important point missing from this article is the fact that part of why Panasonic apparently has the lowest prices, is the economy of scale. Panasonic makes more kWh of EV batteries than any other company, even BYD. That gives Panasonic a great advantage in lowering costs, while also giving Tesla a supply bigger than any other EV maker! It’s that supply which has allowed Tesla to take over the global #1 spot in EV sales.

Keep Going Tesla!

Fantastic – way to go Tesla.
But until you put these cheap high quality cells into a vehicle I would consider buying (ahem, pickup, ahem), they’re not very useful to me πŸ˜‰

EV PU are coming,RAM already has 48 volt system, workhorse and others making hybrids.Would you buy a Tesla PU for $180K?

Why would you say “$180K”?
That is not even good FUD since it is not even remotely believable.

For a $180k you will be able get the long range Semi.

Today Renault Fluence ze battery pack list price is 20.000€ plus IVA (VAT) and only 22kwh. So, Renault, are you pulling my leg?

Tesla charges $900 KWh for the LR 3 option.

Pull your head out B(S)B.

Compared to another option they sell? Which one?
I also sense you hate math….

More like $450/kWh ($9,000 / 20kWh).
But your point is valid of their pack price is $160kWh then the LR upgrade should be about $4,000 – $5,000 not $9,000. Lucky they have a product in high demand and sucker’s are happy to pay such an inflated price. I can only hope competition drives that price downwards.

They are making bank on the LR pack, that is a fact.

It’s actually 25 kWh difference, i.e. 360 $/kWh.

Power train upgrades (or any options, for that matter) always have a very high mark-up. That’s not a Tesla-specific thing. Without these mark-ups, it wouldn’t be possible for any car to sell at its base price at all. The price for the upgrade is inflated, but only because the price without it is discounted — in the end, it all evens out to a reasonable average profit margin.

That’s one of the major reasons why legacy makers haven’t been able to produce EVs profitably thus far: while they always offer a huge range of power train options on their combustion vehicles, they offer hardly any on their EVs. Tesla is the only one that implements the traditional pricing system. Sooner or later, the others will have to follow suit.

I think tesla is actually pretty vague about pack sizes these days, no doubt precisely to avoid people calculating retail $/KWh.

If I remember correctly they never said what the SR pack size is. It’s people that constantly speculate that it may be 50 or 55 kWh.

Electrek published the exact number of cells both for the LR and for the SR pack. The LR number has been confirmed in tear-downs AFAIK — so I think it’s pretty safe to assume their source is right on the SR number as well…

So indeed we do know pretty much for a fact that if LR is ~75 kWh usable, SR is ~50 kWh usable.

No $9k extra for about 20 – 25 more kwh.

Where do you get thaht ? The Renault Fluence ZE is no longer sold since about 4 years. Even in France can’t have the battery replaced in because there is none in stock. So how could Renault sell you one ?

Otherwise you may know the 43kWh (41 kWh usable) battery of the Zoe is sold between 8500 and 9000 €, taxes included, here in Europe. So even if what you said were true it’s clearly not representative of Renault battery selling prices, and even less of current battery costs for Renault or any other carmaker.

I fear you just want to badmouth Renault.

The Gigafactory and had push to bring down battery costs are one of the things that has made Tesla successful.

Elon is a computer guy and he knows that they way you optimize is code is to identify the code sections that are executed the most and optimize the heck out of them for the most payback. To optimize an EV, the battery was identified as the most expensive and most important component. So they decided to optimize the battery as much as possible with what they learned from the Roadster and Model S. They then build a dedicated factory for building battery cells & battery packs. It is all paying off now.

Musk is really a battery guy – his college thesis was on battery cell chemistry improvements.

I believe cells are the costliest component and if cells $120/kWh in 2017, then the pack must be just around $150/kwh. Is that correct?
What is the current cost of the pack.

cell -> pack is between factor 1.1 to 2.5, so it really depends what you want to ensure….

Perhaps an entry on this Fortune article would be appropriate: http://fortune.com/longform/blood-sweat-and-batteries/
I never realized what went into gathering the component material to make batteries. Let’s hope the upcoming solid-state model can work. This article really is upsetting.

I can’t access the article: but if it’s about Cobalt, the problems are well known. (Tesla claims not to be affected.) If it’s about other materials, the reports I have seen have blown the problems way of proportion. A lot of other things we buy every day without thinking are probably way more harmful.

Either way, solid state electrolytes won’t automatically solve these problems…

I don’t give a crap about what Musk predicts…because he is never right. Just show a chart that lists the actual replacement costs for their batteries from year to year. Cut out the “I predict batteries will be cheaper” nonsense.