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Battery Pack Costs

Discussion in 'Model 3' started by Sharkbait, Sep 13, 2016.

  1. Sharkbait

    Sharkbait Member

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    I wonder how much equivalent BEV batteries are costing GM for the Bolt and Tesla for the M3 and will the cost go down for GM little more than a year from now when the M3 should be in production? What company will have the leverage to be more competitive in manufacturing batteries or sourcing them?
     
  2. Model 3

    Model 3 Active Member

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    GM is reported to pay LG $145/kWh on their battery. I'm not sure if this is cell or pack price? This was a very competitive price and I will not think it will get down the first few years.
    The latest known pack-price for the Tesla battery was "under $190/kWh". They have said that they expect at least 30% reduction in price for the cells that they get from the GF-I. Probably closer to 50%. Later there is some indications (the do expect more cells/batteries to be produced at the same factory space - more or less the same investment) that they may have found ways to lower it even more...

    It is to me unknown how many batteries (and other stuff) LG is able to produce to meet GM's needs.
     
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  3. Red Sage

    Red Sage The Cybernetic Samurai

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    There was at one time a reported rumor that Tesla Motors' internal cost was something like $180 per kWh. I believe I first came across that number in the latter half of 2014. I remember being amused, because some guy had recently published his findings that there was 'no way' electric vehicles could be viable for mass market sales until their cost was at $178 per kWh or less. I have no idea if he meant per cell or by the pack.

    GM has stated that they can expand operations to offer 50,000 to 60,000 of the BOLT if necessary to cover unexpected/increased demand.
     
  4. Model 3

    Model 3 Active Member

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    It was cell cost. It was on a new delivery contract with Panasonic - to get them to extend their deliveries as Tesla saw the interest in their Model S.. At that time the pack price was guessed at about $220/kWh (based loosely(?) on the $180/kWh cell price). Other less informed sources guessed their pack price to be way way way above this numbers at that time.

    https://neo.ubs.com/shared/d1vn32UwCm8eh
     
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  5. PaulJB

    PaulJB Member

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    If I remember correctly, this was $145 per kWh for the cells, not the pack.
     
  6. Model 3

    Model 3 Active Member

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    I think that is correct, I just was not quite sure.
     
  7. Red Sage

    Red Sage The Cybernetic Samurai

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    Cool. I prefer to converse in terms of battery cell cost anyway.

    $180 × 0.7 = $126

    So, assuming only the 30% discount than Elon Musk expects from using Gigafactory battery cells... That's only $126 per kWh from the outset. That's $19 less per kWh than GM is getting from LG for the BOLT.

    Assuming a 7% improvement in pricing each year...

    2017 ___ $126 × 0.93 = $117.18
    2018 ___ $117.18 × 0.93 = $108.98
    2019 ___ $108.98 × 0.93 = $101.35
    2020 ___ $101.35 × 0.93 = $94.25
    2021 ___ $94.25 × 0.93 = $87.66

    Hence, why Elon Musk said in 2014 that he would be disappointed if it took a decade for Tesla Motors to get below $100 per kWh.
     
  8. Model 3

    Model 3 Active Member

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    The $180/kWh price was from 2013 or 2014. We are now at 2016, and the battery cells from GF-I will probably not start to appear in production cars until 2017. So it is reasonable to think that the (at least) 30% price reduction is from a lower price-point then that. When the LG battery price was published last year Elon hinted (from en event in Japan if I remember correct) that Tesla already was below this $145/kWh cell price. But that statement could also be interpreted as "the price will be below this when Model 3 is produced".
     
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  9. MiamiNole

    MiamiNole Member

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    I remember reading about this topic months back and someone saying that GM's deal with LG has a price that is locked in for a significant amount of years. So even as the cost to LG goes down, GM is still locked into the same price throughout the deal.
     
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  10. Model 3

    Model 3 Active Member

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    Seems reasonable. I guessed that this was the case, but have no sources or evidents that it is so.
     
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  11. jonnyg

    jonnyg Member

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    And the only reason GM got this low price is because GM is buying tons of other stuff for the Bolt from LG. Pretty much anything tech is from LG as I recall. Since they got the package deal from LG, they priced the cells low. If they were just buying cells, I'm sure it would have been a lot higher.
     
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  12. MiamiNole

    MiamiNole Member

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    [​IMG]

    I know someone had a direct source citing the length of the GM deal with LG Chem, but couldn't find it during a quick google search. Best I could find was a year old article from Inside EVs. According to this graph from the article, the $145 price is locked in through 2019. I also found other articles mentioning the GM-LG Chem partnership also including LG being the sole supplier for a number of electronics in the Bolt, as the poster above mentioned.
     
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  13. PaulJB

    PaulJB Member

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    I've heard people jokingly refer to it as the LG Bolt rather than the Chevy Bolt. Its probably not far from the truth.
     
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  14. FirstSea

    FirstSea Member

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    I find it hilarious that GM probably doesn't care about battery cost nor needs the Bolt to be profitable. Meanwhile, Tesla needs to lower battery cost and be profitable to remain afloat, pressure makes people and businesses do the impossible.

    I'm really looking forward to seeing how things play out.
     
  15. jonnyg

    jonnyg Member

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    When you're only going to make 20k-30k per year and you are selling tons of ICE SUVs and trucks and making a killing off them, losing money on the Bolt is a rounding error in your financials.
     
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  16. Red Sage

    Red Sage The Cybernetic Samurai

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    Yup! A rounding error attributed to marketing expenses. Plus, with truckload of ZEV Credits from CARB States it ends up being a wash -- aside from the improved CAFE rating allowing you to build and sell even MORE SUVs and pickups.
     
  17. SmartElectric

    SmartElectric Active Member

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    I don't joke about it. One of my co-workers resists buying GM, but when I mentioned all the important bits were LG, it made him more interested. He'll get an EV, but not sure which one.
     
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  18. techmaven

    techmaven Active Member

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    Here's the original article that discusses Tesla's current battery pricing

    UBS Sees Telsa's (TSLA) Model 3 As Unprofitable

    Basically, Jon Bereisa who was the chief engineer of the Chevy Volt estimated that the Chevy Bolt's battery pricing to be $210/kWh at the pack level, based on $145/kWh at the cell level. Obviously, he knows GM's and LG's costs the best. He also estimated that Tesla's Model 3 pack costs would be $260/kWh. Of course, he doesn't know Tesla or Panasonic costs at all. So Jeff Evanson of Tesla Investor Relations calls in and states that the Model S's all-in pack cost is already under $190/kWh.

    There is some contention on SG&A, R&D, and other items to sort out costs. What the UBS analyst and Mr. Bereisa don't seem to understand is that the Gigafactory won't have typical supplier markup.

    In any case, for gross margin purposes, Tesla's pack cost is under $190/kWh now. Even at a modest 20% reduction with the Gigafactory, the cost would be $152/kWh.

    Therefore, a 60 kWh Bolt pack would cost GM about $12,500.
    A 55 kWh Model 3 pack would cost Tesla about $8,500.

    A difference of about $4,000 on vehicles that retail for the mid-$30k's is a lot. Margin at these price points is very slim. However, GM's pricing for the rest of the car is likely far better than Tesla's pricing. Basically, the pack cost advantage is one of the key parts where Tesla makes up ground for their lack of manufacturing expertise at a grand scale.
     
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