Tesla Giga Factory Actually For Aging Tesla Model S?

MAY 9 2014 BY ERIC LOVEDAY 51

Tesla Giga Factory

Tesla Giga Factory

At Some Point In Time, The Tesla Model S Will Be A Classic Like The Model T.  Keeping The Model S On The Road Will Require Somewhat Frequent Battery Pack Replacements

At Some Point In Time, The Tesla Model S Will Be A Classic Like The Model T. Keeping The Model S On The Road Will Require Somewhat Frequent Battery Pack Replacements

Some say Tesla’s proposed gigafactory will mainly support the battery cell requirements of Tesla Gen 3 and Tesla vehicle beyond Gen 3.

Others believe the gigafactory will largely produce cells for use in energy storage systems, including those used by Solar City and Tesla’s Supercharger network.

Even a few think the Tesla gigafactory will produce cells for distribution to other automakers/laptop makers/cell phone manufacturers and so on.

There’s a whole host of ideas out there regarding what the future holds for the Tesla gigafactory, but not one of those ideas floating around suggest what you’re going to read here.

A guy by the name of Richard Menta may be on the right reack  Here’s an abbreviated version of his take on the gigafactory

“Several year’s from now there will be on the road a good number of eight-year old Tesla Model S vehicles with well over 100,000 miles on them. Many will be running perfectly, but for most their aging batteries will have lost at least some efficiency. As the cars get a little older they will lose significant efficiency and at some point those batteries will be due for replacement.”

“If it costs $25,000 to replace those batteries it will crush the resale of older Tesla cars. It would also kill the residual value of those cars, critical when you lease a new Tesla.”

“Companies like Panasonic, who supply Tesla batteries today, produce according to short term need and mid-term projections. If Tesla continues to outsource battery production they have to be spot on with those projections or else they will be left with either an over-supply of batteries or, worse, a critical shortage.”

Menta then goes on to discuss why the giga factory could be a big money maker for Tesla in the near future:

“Battery replacement for older Teslas could be a lucrative side business if the retail price is relatively reasonable for a car that, on average, is coming off the production line around the $90K range. But if the cost of battery production is so high that the retail price offers little incentive to replace them…”

“Tesla wants to avoid battery replacement sticker shock when the eight year, 125,000 mile warranties on the original batteries start to expire.”

“Tesla has already put over 25,000 Model S sedans on the road. A decade from now there will be a lot of cars that will need a battery refresh. The lower the production costs for replacement batteries, the bigger the potential payday for both Panasonic and Tesla.”

Menta then asks these questions related to vehicles with aging batteries.  We think questions such as these are on the minds of all those who closely follow the electric vehicle industry

“The question going forward is this: what will the market bear to replace the batteries on a aging electric luxury car? What will a nine-year old Tesla Model S with 110,000 miles on it be worth with perfectly functioning batteries? What will it be worth if the batteries need replacement?”

In closing, we’d like to ask if you think Menta is on the right track here or if he is way off course.  Could it be that Tesla’s actually thinking Roadster, Model S, Model X and eventually Gen 3 replacement batteries for the gigafactory?  It seems plausible and could be a lucrative side business for Tesla, right?  For sure the gigafactory will produce cells for new vehicles too, but could this replacement battery idea be BIG business for Tesla?

Source: MP3 Newswire

Categories: Tesla

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51 Comments on "Tesla Giga Factory Actually For Aging Tesla Model S?"

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Over supply of batteries wouldn’t be so bad if they are using cells for energy storage I assume.

The batteries would prove useful to the owners if they can use them for home energy storage systems for Solar PV ?

I would think so…

Exactly. I plan to install the old battery in my home when I replace it in the car.

My question would be how many engine rebuilds do folks put in aging mercs and bmws? When I heard tesla is now starting 2 gigs factories with the intent to down select later I have to imagine with all the potential ideas listed on the article they’ll actually open both.

In my mind the biggest risk is new chemistry that leapfrogs Panasonic or makes large form factor batteries cheaper with comparable energy density. Good problems for the consumer however.

Batteries are the consumers way to lessen our need for the grid

“In my mind the biggest risk is new chemistry that leapfrogs Panasonic”

They will be partnering with Panasonic on that factory, with Panasonic of course doing the R&D in battery chemistry. How can you leapfrog yourself?

It would seem a logical part of Tesla’s Gigafactory strategy. They have already indicated that battery recycling would be integrated. So after 10yrs on the road, an old battery trade-in against a replacement battery purchase could also be part of their plans.

I would expect your typical manufacturer (Toyota, Nissan, etc) to simply abandon cars once they are 10 years old. As in, won’t bother to make replacement parts available. Of course it is sort of in their interest to do so. How can they sell as many new cars if people are still driving their old ones?

Tesla has proven to be somewhat different in this attitude, at least when it comes to software updates. So who knows.

One question nobody really knows right now is what is the life-expectancy of a Tesla Model-S battery pack?

One thing is for sure. It will be easier for aftermarket companies to come in and rebuild Tesla packs because they do essentially use an off-the-shelf battery type. It would be much more difficult for an aftermarket company to rebuild Nissan Leaf or Chevy Volt packs.

Tesla uses modified 18650 cells that are produced for them by Panasonic. I doubt that you could plunk in any 18650, but I may be wrong.

All automotive OEM’s guarantee to provide replacement parts for 20 years. After that it is aftermarket or the junkyard.

Can you please post the source of this information? I’m not from US and can’t believe it.

Battery replacement is a much more critical issue for the Leaf etc than the Teslas.

If an 85kwh battery pack loses a lot of its range, it is still usable for a useful distance, fine for an old car.

Not so a car with a 24kwh pack.
Leafs are cheaper to start with than a Tesla, so no one is going to want to buy a new pack for a 8-10 year old Leaf, as it would cost more than the car is worth.

So effectively the Leaf will depreciate to zero over that time.

For an expensive car like the Tesla, apart from the fact that you would need to do umpteen miles to run the pack down enough to need replacing, as you get a lot of miles per cycle, the car will still be worth enough to make replacement economic.

There will be a lot of worthless old Leaf cars about though.

Sorry, have to disagree here. Lets say the Leaf’s battery will cost $5,000 for the current 84-mile version. I suspect it will be less than that years from now, but this is the current estimated costs of the cells.

So lets say you find an old Leaf for sale with a dead battery. If the car’s in good shape, I could easily see the car bringing $7,000 or more. Because you can stick in a brand new battery and then have a $12,000 car with an 84-mile range and should last you many years.

For example, a few years back I knew somebody selling an old 2001 Prius that needed a new battery. I paid $3,000 for the car, and $1,900 for a new battery. The car ran fine and I drove it for several years before selling it to a friend who is still driving it.

Used LEAFs are already selling in the low-teens (under $15k). Of course, that’s with a 3-year old battery.

Nissan does need to sell replacement batteries, but so far they won’t. Only way to get a replacement battery is to pay a third party about $5k for a pack pulled from a wrecked LEAF.

I’m still not sure what Nissan will do.
I think I need the opinion of another Dave 😉

The price of a new battery pack in the relevant time frame for replacement might be of the order of $200 kwh, but that is a very different matter to replacement costs. Companies don’t just offer spares at cost, or anything like it, in fact it is a very big profit centre for them. At the moment anywhere that EVs are selling in any quantity at all have around $7,500 or so floating about to defray manufacturing costs and provide enough profit to make it viable for manufacturers to offer EVs, but that won’t be available as they expire, and anyway would not be offered just on the battery. Don’t be confused by Tesla’s offer of a $12,500 replacement battery. That was clever financial engineering, as essentially Tesla raised venture capital without paying the high rates of interest that normally has to be paid for it. In any case as I itemised above Tesla packs are not likely to need replacing, and Tesla will have a darn good battery pack with plenty of life left traded in. Nissan want to sell a new car, not provide replacement battery packs for old ones at close to zero profit. So I reckon… Read more »

You are not thinking 4 dimensionally 🙂

What will have happened in 10 years?
– Battery development has come a long way (we have sooo many things running on batteries even now that in dire need of longer running times besides cars)…
– MANY Leafs will have been sold, making up a huge market…

Of this I expect a compelling after-market where you get twice the range in an old Leaf with half the money of today…

Go-go battery development research 🙂

In support of this argument, I note that Tesla Motors said, in a blog post by George Blankenship, that TM will offer an “option” to guarantee the price of a Model S 85 kWh replacement pack won’t be higher than $12,000, but no sooner than 8 years after purchase, and by the original owner. If TM wants to sell those without taking a loss, then obviously they need to be able to build battery packs at substantially less than their current cost. That said, I don’t think this is really an important consideration for TM. To achieve their goal of producing the GEN III car — a good EV, with a good range, for half the price of the Model S — TM -has- to significantly lower the price of its battery packs. And right now, the “gigafactory” looks like the only practical way to achieve that. The only alternative is to just sit around and wait for the next significant battery breakthru to occur– something TM would have no control over. The GEN III car will be produced in such high volume that any income from replacement battery packs for the Model S will be insignificant by comparison. Is… Read more »

CA’s statewide battery storage utility mandate is 1.3GW. The recent story of cell production put the industry at consuming 1.4GWh of cells, per quarter. I bet utility demand will be baseline, at some cost level that salvages Tesla cells, rather then having them immediately getting reconstituted at their facility.

I’ve seen studies, not sure of the merit, but suggesting sealed lead-acid prices of $200/kwh, back several years ago when lithium was closer to $1,000/kwh. Part of what’s important isn’t weight, but better cycle life and higher discharge rates. Short peak solutions may come at a premium, as “spinning” reserves fire to offset renewable resources. I bet it can be argued, pound for pound, lithium does this better. If auto batteries come out the other end of their life, at a 5.6GWH annual rate, they will, at the very least, be creating a market that didn’t exist before.

I’m not yet convinced they are even going to build 18650 batteries at the new plant.

I’m almost certain they’ll take the safe route an stick with what works for them.

Agreed.

I would expect Tesla to make packs for the Model S and perhaps even the Roadster in the gigafactory / gigafactories. But that surely won’t be their primary focus for building a factory *now* ..

Assuming Tesla modeled the pack durability properly, most packs will be fine throughout the warranty period of 8 years. I expect packs will probably be replaced in the 10-15 year range .. no point in building a factory in 2017 that can ramp up to 500k packs/year by 2020 .. for a need for thousands of packs starting in 2022.

Hmmm, I’m having a hard time seeing any company basing their business plans on 8 year old product support. There are lots of businesses that focus on repair/rejuvenation of older products but why would Tesla? It makes zero business sense. Before anyone says “but Tesla is a new kind of company”, I ask them to consider if they have been able to repeal the laws of economics… Last time I heard that argument was 1999 and we know how that turned out.

Has anyone looked at used Roadster prices?

I have.

They are still sky high even though the ’08 Roadsters are getting close to being 10 years old.

No way I’m going to pay those kind of bucks for a used Roadster with a pack replacement looming in the near future.

A study on Roadsters showed that they’re expected to have 85% of battery life after 100,000 miles.

Not that I would buy one, as I see it as a ripoff at even half of MSRP (unlike the Model S), but batteries aren’t an issue.

On ebay those Tesla Roadsters are going for $50,000 to $70,000 dollars each with a few $90,000 dollar ones.

What would be super cool is if had to put in a new batter back in a Roadster for $3000 to $1500 dollars but the new battery pack had double or triple the range of the old one.

The article’s point can be amplified by the 150k warranties, of the CARB states. Bigger liability, and bigger per state sales, for Tesla.

In waiting to possibly go used, I’m both confident 40k-60k mile MS’s will have solutions for them, someday, that DC infrastructure will outrun battery degradation, but that this won’t stop the mileage depreciation from being bad, because of fear.

If this had been the pitch for why to build this battery factory, Tesla stock would have gone South of $100. Clearly no shareholder hopes that THIS is the reason why they need to spend $5 billion building a battery factory: Fixing the old cars.

I think the EV resale question is a whole new game that the market doesn’t understand yet. there are so many things that can go wrong with an ICE that make it essentially worthless, engine, transmission, and lately fuel economy improvements. EVs really have only the battery issue and I think energy density improvements may even make the value of an old EV with a new battery more valuable than a later model with a good last gen battery. So yes, I think there will be a huge after market for replacement battery packs and they will not be as expensive as people imagine, remember that a 70% battery will still look extremely useful for grid storage. All those model Ss will get new batteries eventually and I even wonder if some OEMs or aftermarket parts suppliers will make replacements for other brands, Tesla could probably make a 130mile Leaf pack now if they wanted to.

EVs have less to go wrong than ICE cars, but it is far from the case that that is all that you have to worry about.

Electrics are themselves one of the major expensive problems in older cars, and there is the suspension and so on.

In an 8-10 year old car, even the seats and upholstery suffer wear and deteriorate.

You are far better off leasing a Leaf now, and getting a new one with double the range instead of patching up the old one.

Let Nissan worry about repairs on old cars and depreciation instead of you.

+ 1

Don’t forget EV’s are full of electronics (the charger, BMS, power train, management and control). That means way more circuit boards than a modern luxury ICE.

Nearly all circuit boards are made/assembled in the far east. Those things generally do not last 10+ years. Even a made in America car like the Tesla Model S is bound to have circuit boards made in China. Foxconn is their electronics JDM.

Without the heat cycles, the electronics should last much longer in an EV. And the high-heat power electronics are liquid heated/cooled along with the electric motor and battery pack in the Model S. Furthermore, I don’t know what you people do to your cars, but my family has kept vehicles running safely and efficiently for up to about 200,000 miles (living in the Mid-Atlantic region of the US). Once you get up to 200k, you start running the risk of serious problems, like blown head gaskets, failed automatic transmissions and failed brake master cylinders: things the Model S will not have to worry about (except the brakes, eventually). The interiors have had some wear and tear, such as some scuffs on the vynil and the floor carpet worn in front of each seat. But, that’s it. Our cars are always neat and clean – we don’t keep junk in them, and we usually don’t eat in them, either. There is no need for meticulous maintenance, either. Just sweep them out a few times a year with the vacuum. Wash the exterior a few times a year…wax once a year…you’re golden. No, if I bought a Model S, I would replace… Read more »

Vehicles are a losing financial proposition. Anything else is an interesting but pointless exercise. The only value in a mass-market car is how long it can last without: 1) compromising safey, 2) compromising efficiency, and 3) becoming cost-prohibitive to maintain.

The biggest killer to me as far as what kills Ice cars is the transmission on them. In that I have always had my cars die at 180,000 or 200,000. If a EV doesn’t have a transmission and a simple electric motor. It might make more sense to rebuild the motor then the transmission. In that I did once have a 1980’s Corvette that we had the transmission rebuilt on and it was still going strong after 25 years. Another thing about old cars is as long as you keep the window seals on them working or keep them in a garage and keep the rain from getting in them they could last 50 or 70 years. But in the case of this one car we had that was from the 1980’s the window seals didn’t work and it was the horrible smell from the rain and humidify getting into it none stop that made us sell it. Another thing about old cars is what worries me about the Tesla is all the electronic gizmos that it has in it. In that the more electronic things it has in it the more can go wrong. Such as I think a… Read more »

Richard Menta has a point, the Tesla battery packs will last a long time -probably a lot longer even than he thinks- but the aluminum cars will last even longer so at some point replacing Model S batteries could well be another source of income for whatever battery factories Tesla will have operational many years from now. Assuming of course battery cost is low enough to justify fixing up a maybe 12-15 year old cars that will no doubt have plenty of life left in it but it will still be old. I like to think people will replace the batteries and the cars end up lasting for decades.

In the show Life After People Aluminum can last over 10,000 years. So basically in a post apocalyptic future you could technically have the carcasses of Tesla Model S cars lying in the middle of the woods a 1000 years in the future while all of the other metal cars have rusted though.

If sales projections are right, more Gen III’s will be produced in its first year than all Model S’s produced at that time. Most of these Model S’s and X’s will be less than 5 years old and not in need of battery replacement anytime soon.

I doubt if many Model S’s will ever have their battery pack replaced. Past the age of 10, a car is beginning to show age and nobody will want to sink that kind of money in an ageing car quickly losing value.

Additionally, much more Superchargers and other fast chargers will be installed in the mean time, so even with severe capacity loss a 60 or 85 kWh Model S is still a usable car. So I don’t really see the necessity.

My take on it: this guy is totally wrong.

That is typically true for typical cars.

Tesla with an aluminum unibody held together with aerospace grade bolts and adhesives may be different.

A 15 year old 60 kWh Model S with 120 kWh battery pack replacement, new springs/struts, reupholstered front seats, new air conditioning system, and new paint job may give you the performance of a new 2027 Model S Performance Plus at one third the cost. All with the panache of classic first gen Model S styling. Old school retro cool.

It’s not a matter of technical lifetime.

It’s fashion or the need to buy something new every now and then. People buy a new stuff long before the end of its lifetime and cars are no exception. After 15 years, that car will be yesterday’s tech and yesterday’s styling, no matter how pristine the body is.

People don’t compare a 15 year old car to how it was 15 years ago when new. People compare a 15 year old car to the new cars on the market at that time.

And don’t count on that future 120 kWh battery to be compatible with today’s Model S. It will have another form factor/voltage/connectors /communication protocols etc. Just like I can’t put the newest Core i7 into a 6 year old laptop to give it a performance boost so it can run Windows 8.

It would interesting to compare after a few decades those Tesla’s that were sold in the first years to see, in comparison to ice, how many are still on the road. I would like 5 to 1 after 20 years would be close to the mark.
Electric engines can last a long, long, time.
Whether it is worth it to keep a car in running order for so long I think the probability is much higher for the ev.

I disagree.

I don’t think that is the main reason.

soon or later, Tesla needs it own battery format optimized for its own car. That is why Tesla needs a factory large enough to produce its own format at a lower price than a “generic” battery maker.

The guy makes a good point, but it is painfully obvious that replacement packs are NOT the #1 reason for the gigafactory(ies).

However, I’m very confident that Tesla, being as vertically integrated as they are, will want to produce their own replacement packs for their own legacy models. It would be weird if they didn’t, actually, given the company’s path to date.

It’s just another smart use of existing facilities, but by far the main concern is supply for new cars.

His entire claim is based upon the fallacy that these batteries will need to be replaced just because the warranty has expired. This has been proven to be a fallacy by over a decade and a half of the exact same bogus claims being made about the batteries in Hybrids. It has been proven wrong, with plenty of old Prii running around that are way, way, way out of warranty and still going strong. Everybody would laugh hysterically if he claimed that all gas cars would need to have their gas engines replaced as soon as the warranty is over, just because that’s how long the warranty is. Even worse, he presumes that all these cars will get brand new battery packs from Tesla. That has not been the reality for hybrids. People who have to replace batteries outside of warranty often choose used packs from cars that have been in a crash, or have their own packs refurbished. Tesla’s and all other EV’s won’t be any different. There is no reason to expect large numbers of cars will be getting brand new factory battery packs, and more than gas cars with 100K or 150K miles would get a brand… Read more »

I have seen first generation Prius on the roads and in the parking lots in my area and they look fine. My biggest worry about old cars is them getting into a accident in that is what usefully kills them.

No, they are moving for now on two sites not to jeopardize the formerly Model E launch in 2017. They will need a LOT more capacity for S, X, and the “E” in 2017. The replacement market is another matter altogether. I imagine the factory may have a role in re-purposing used car batteries for stationary use. I think most will still be in service since the 85 size is warranted for 8 years and UNLIMITED miles. Mr. Menta has some other inaccuracies in his musings but that doesn’t mean Tesla won’t use the plant to also produce replacement packs. It is also important to Tesla’s long term success to bring the replacement pack cost down but that doesn’t mean the Gigafactory’s primary purpose and timing isn’t for the Model “E”. It most certainly is.

This is good pondering. But this was all along in the plans of Tesla as gigafactory is designed from the beginning to utilize fully and most costefficiently the recycled battery packs. This is also one part why Tesla is aiming for the considerable cost savings as today the infrastructure for recycling of batteries is minimal. But my guess is that by 2020, Tesla has under construction two or three additional gigafactories in several continents. Because not only Tesla is aiming for one million (or two) car production in Early 2020’s but also there are huge markets for energy storage systems — perhaps bigger than EV battery markets. After personal cars comes the electrification of busses, light trucks and heavy trucking. Also these markets are larger than personal electric car markets. Therefore it may well be that the biggest business for Tesla is the battery business and making cars is just side show. But Tesla certainly won’t be the only one, but many other traditional car companies are aiming for the energy storage business. This is due to simple fact that it does not make sense to produce cars by outsourcing batteries and on the other hand having competitive electric cars… Read more »

Uh . . . it is for ALL of their cars.

“…avoid sticker shock” for replacement batteries. Most salient statment in the post.

This is THE elephant in the room for all of us. Huge unknowns here. Do we 1) lump the guestimated $10K+ for a replacement battery as equalling out all the gas/maintenance we saved and call it a wash (but still fun)? Or do we 2) assume that $10K is saving us money on replacing a whole new car. Jury is still out for me.

I have to make this decision with many unknowns in 3 years when my lease on my Ford Focus Electric is done. I will have to make a gut bet on whether I want to buy out the remaining value of the car/battery, or move on to the latest and greatest. How many technology improvements will it take for us to emotionally reinvest in a whole new EV? How much more range? 500? Autopilot? AWD? You can bet every savy manufacturer is asking the same question.

Side note:
I totally want a branding patch for my car after its battery is replaced, “powered by TESLA”!!!! I would feel like I joined the cool club.

All of the above. Tesla is building batteries because it is centeral to their business. The more aspect of their business they can control the better they can run Tesla. Superchargers, dealer networks/servicing, and now battery supply chair. it’s all done to secure Tesla’s business.

It’s certainly true that lowering the cost of a replacement pack will increase the resale value of an EV. That’s true regardless of how long the original owner keeps it, and regardless of whether or not EVs will be kept substantially longer by their first owners. So yeah, that’s probably a secondary motivation for Tesla Motors to build a “gigafactory”.

I also agree with the point made that the grid power storage market can be filled as an aftermarket for EV batteries. A battery pack that has been degraded to 80% or 70%, or even 50%, of its original storage capacity, will still be cost-effective for grid storage. It would be much more cost-effective for a utility company to buy used EVbattery packs, for high volume grid power storage.