Gigafactory costing advantage - and will Tesla sell batteries to other EV manufacturers?

[MXWing]

Am I correct that the most expensive part of an electric vehicle is the battery?

The battery is the main driver behind range/performance.

With the gigafactory tooled to produce batteries en mass, wouldn't it allow Tesla to produce batteries cheaper than anyone else?

Cheaper batteries make for cheaper cars or better performing cars at the same price point.

This would seem to me, a bright future for Tesla ahead if they have a significant production/costing advantage for their EV against other EVs making long positions a good one for Tesla?

Also, would Tesla be willing/get interests to do so about selling their batteries to other EV manufacturers? Like a Tesla battery inside a Toyota, GM vehicle etc.

Would appreciate any agreements or disagreements with the above.

 

[3Victoria]

While they may consider it, the whole production from GF1 is spoken for in terms of TEnergy and TAuto.

 

[MXWing]

While they may consider it, the whole production from GF1 is spoken for in terms of TEnergy and TAuto.

That's not bad news. I feel its better to have supply side problems than demand side.

Would batteries be a hold up for 2017 production of M3s?

 

[3Victoria]

No, if things go according to plan. The whole point of GF1 was to make batteries for the Model 3.

 

[MXWing]

No, if things go according to plan. The whole point of GF1 was to make batteries for the Model 3.

There is a lot of betting on the M3. Both long and short positions. Hoping I am on the right side by going long.

 

[CSFTN]

GF not big enough to supply other manufacturers, unless they dump Powerwall or Powerball dies. To be honest, I think the real reason they are making Powerball is exactly so that they have a 2nd product that can absorb any excess capacity.

 

[3Victoria]

GF not big enough to supply other manufacturers, unless they dump Powerwall or Powerball dies. To be honest, I think the real reason they are making Powerball is exactly so that they have a 2nd product that can absorb any excess capacity.

I don't think that is the real reason, Powerwalls and Powerpacks are valuable in their own right. However, a handy side-effect is that extra battery production can be absorbed by them. I think the battery production volume is pretty controllable, so matching production to need shouldn't be too hard. Getting the ramp right might be harder, as they will have to add capacity quite soon.

 

[GoTslaGo]

My understanding is that GF1 will be maxed out once model 3 ramps.

Others have pointed to an article showing that 60% of consumers have no knowledge of EVs. Thus there is a huge untapped market for future model 3s.

As model 3s hit the road, more owners will share their experiences and thereby expand demand. If one owner convinces 2 people to get a model 3, with current reservations at 400k, your looking at 800k, etc... Thus there may not be extra cells for sale once model 3 is out. Let's not forget model Y will be next, which will stoke demand even more.

If tesla can upgrade their super chargers allowing a 10 to 15 minute charge time to 90-100%, then this roadblock to ownership will disappear as well.

In summary, I do not believe tesla will have extra batteries to sell once model 3 starts to ramp up.

 

[Saghost]

I think Tesla would be willing to entertain the idea, if they somehow ended up with more supply than their cars and energy storage could consume.

I don't think that's likely to happen, though - they have huge markets that they'll be just starting to tap - and I don't think that they'll curtail one of those plans so that they can supply battery packs for someone else's cars.

 

[Waiting4M3]

GF may be to Tesla what AWS is to Amazon. At the very least it helps internal cost reduction tremendously. And they have the freedom to test the water, if the demand is there, they can expand and open it to external customers and make a very lucrative business out of it.

 

[roblab]

If tesla can upgrade their super chargers allowing a 10 to 15 minute charge time to 90-100%, then this roadblock to ownership will disappear as well.

Just want to beat this point one more time:

The battery charges quite nicely when near empty. but the last 20% takes as long to charge as the first 80%. Quit trying to fill the battery at the supercharger.

Very, very seldom does one have to charge to 90 or 100% at a supercharger. These superchargers are for long distance travel, and superchargers are planned to be 100 or 130 miles apart cross country. In some areas of supercharging overuse, where people have to wait in line, there are other superchargers less than 50 miles away, and those wanting to charge to 100% live nearby, using the supercharger to save less than $10. If people only charged 20 minutes, there would be no lines, and travelers could make it on down the road.

I see, though, that a large percentage of new Tesla buyers don't understand the need for range until they are in a line at the SC. I recommend always to buy more battery kWh than you can "afford", and you can then make it past the clogged SCs.

 

[jhm]

In terms of disrupting fossil fuels more quickly, automotive batteries may have bigger impact than stationary batteries. EVs kill demand for oil while grid batteries offset mostly natural gas for peak power. Why should the type of fuel matter? Well, oil is profitable to drill for while natural gas is largely a low value co-product of seeking oil. So the sooner demand for oil is thwarted, the supply of natgas will will dry up as well. Increasing the price on natural gas will do more to advance penetration of renewables than grid batteries. In my view, EVs regardless of maker should be the first priority for the GF.

 

[Dwdnjck]

Elon has stated that,to reach his goals of sustainable energy and transportation, will take 100 gigafactories. It will be a long time till he has any batteries to spare

 

[MitchJi]

There is a lot of betting on the M3. Both long and short positions. Hoping I am on the right side by going long.

You are!

Elon has stated that,to reach his goals of sustainable energy and transportation, will take 100 gigafactories. It will be a long time till he has any batteries to spare

He has no intention for Tesla to do that.

He said that Tesla is not big enough to do that.

 

[GoTslaGo]

Just want to beat this point one more time:

The battery charges quite nicely when near empty. but the last 20% takes as long to charge as the first 80%. Quit trying to fill the battery at the supercharger.

Very, very seldom does one have to charge to 90 or 100% at a supercharger. These superchargers are for long distance travel, and superchargers are planned to be 100 or 130 miles apart cross country. In some areas of supercharging overuse, where people have to wait in line, there are other superchargers less than 50 miles away, and those wanting to charge to 100% live nearby, using the supercharger to save less than $10. If people only charged 20 minutes, there would be no lines, and travelers could make it on down the road.

I see, though, that a large percentage of new Tesla buyers don't understand the need for range until they are in a line at the SC. I recommend always to buy more battery kWh than you can "afford", and you can then make it past the clogged SCs.

That's for now.

With the software limited 60's, folks are talking about getting a full charge at a supercharger in 30 minutes. If the model 3s are all software limited like the 60's, then they could charge to 100% faster (because they would only be charging to 80% or 90%).

Add in the potential tripling of supercharging speeds if Tesla rolls out 300kW capacity supercharger as Mr. Musk alluded to over the holidays. Then you have a situation where the supercharger could give a full charge in 10-15 minutes. This of course depends on the C-rate of the batteries, but I am confident that this is designed into the system that will be the Model 3 (otherwise why would Tesla plan on upping the supercharger capacity).

This would make adoption by the non-EV driving population easier (who are used to gas stations), and allow non-homeowners to use the Superchargers. Hopefully those that own a home will understand the significant benefit of having a home charger and will combine it with Powerwalls and Solar (Provided by Tesla), or will learn to do so over time. (Side note, home or work charging is the BEST)

So right now we have congestion issues with the superchargers because of multiple limitations, but if each Tesla could full charge in 10-15 minutes (not 30 to 1+ hour), then it would be like a trip to Costco to get gas... and yes there are long lines with that too...

Also by the time the Model 3s are out in force, Tesla will have developed a system to charge folks for using the Superchargers and thereby help recoup some costs of the additional development.

 

[jhm]

Elon has stated that,to reach his goals of sustainable energy and transportation, will take 100 gigafactories. It will be a long time till he has any batteries to spare

Just to bring about peak oil demand we may need capacity for as many as 25M EVs per year. That's about 2500 GWh/year.

This will be spread out over multiple battery makers, but I do hope that Tesla holds at least 20% of this. GF1 will have about 150 GWh capacity by 2020. Tesla could have four facilities with comparable ultimate capacity. So I think 500 GWh capacity by 2024 is doable.

They would need to break ground on GF2 in 2018, GF3 in 2020, and GF4 in 2021. I think we're looking at about $1B for each plant plus $80M per GWh of machinery. So altogether about $44B in capital. But suppose the ramp up to 500 GWh is linear over 8 years. Then by 2020 that is cumulative production of about 2000 GWh. Thus, Tesla and Panasonic can break even on $44B by that time if the net at least $22/kWh. So in reality the GF1 is hardest to finance. If each kWh is netting $25 to cover cost of capital, the scheme becomes completely self funding once 200 GWh capacity is put into production. The gross profit per kWh may start out high, may $60 at first and then declines as competition exerts pricing pressure. This is why it is critical to move fast. GF1 could breakeven before it is completed if the gross profit is greater than $44/kWh, and once it has paid for itself, it can fund more facotries. Late competitors will not have that advantage.

 

[MitchJi]

This will be spread out over multiple battery makers, but I do hope that Tesla holds at least 20% of this. GF1 will have about 150 GWh capacity by 2020. Tesla could have four facilities with comparable ultimate capacity. So I think 500 GWh capacity by 2024 is doable.

They would need to break ground on GF2 in 2018, GF3 in 2020, and GF4 in 2021. I think we're looking at about $1B for each plant plus $80M per GWh of machinery. So altogether about $44B in capital. But suppose the ramp up to 500 GWh is linear over 8 years. Then by 2020 that is cumulative production of about 2000 GWh. Thus, Tesla and Panasonic can break even on $44B by that time if the net at least $22/kWh. So in reality the GF1 is hardest to finance. If each kWh is netting $25 to cover cost of capital, the scheme becomes completely self funding once 200 GWh capacity is put into production. The gross profit per kWh may start out high, may $60 at first and then declines as competition exerts pricing pressure. This is why it is critical to move fast. GF1 could breakeven before it is completed if the gross profit is greater than $44/kWh, and once it has paid for itself, it can fund more facotries. Late competitors will not have that advantage.

Now that they've designed and built the cell manufacturing equipment for the first phase additional phases, and factories, will be cheaper and faster.

 

[malcolm]

Can't see other automakers wanting to be seen partnering with Tesla Energy. They are still in denial when it comes to BEVs.

Sure, they have announced their own BEVs, but they are being positioned as low volume, loss leaders.

Efforts and investments are focussed on deals with the likes of LG to supply packs for hybrids.

 

[jhm]

Now that they've designed and built the cell manufacturing equipment for the first phase additional phases, and factories, will be cheaper and faster.

Indeed. Learning curve may well apply to specialized equipment and overall process design. This may be a 15% reduction in cost per unit of productive capacity every time cumulative capacity doubles. So if the roll out pace grows by 50% per year, which it should to keep pace with growth in EVS, then that would lead to an annual cost reduction of about 9%.

Now if the roll out can grow faster to accommodate say faster growing TE business or selling gigafactories to other companies, then perhaps experience could grow at say 80%. This would lead to 13% annual cost reduction.

So with the learning curve, accelerating the rate of growth can increase the rate at which costs decline. This is a huge advantage. And we have seen this already in seen real advances in design of Gigafactory machinery. Specially, making the equipment more compact so that 3 times the capacity can fit into the same size building is enormous. First the cost of the building and land was about 20% of total capex. Cutting that to a third is a 13% cost reduction on the cost per capacity. Densification may also reduce the length of cables, pipes, and pathways. So the capex per capacity reduction may be greater than 13%. Moreover, I suspect that this densification of the plant could potential reduce some operating costs by reducing travel distances.

So I suspect this view lends some insight into how Musk views the Gigafactory as a product. It is an ongoing process that is subject to continuous improvement. The world is going to need more than 10 TWh of Gigafactory capacity. That is more than 100 times the current global capacity. That is an opportunity for 7 doublings. So the cost of GF capacity could decline by 67% over that time. So I think there is a serious market here for Tesla to supply the world with Gigafactories.

 

[RobStark]

As model 3s hit the road, more owners will share their experiences and thereby expand demand. If one owner convinces 2 people to get a model 3, with current reservations at 400k, your looking at 800k, etc... Thus there may not be extra cells for sale once model 3 is out. Let's not forget model Y will be next, which will stoke demand even more.