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Is a battery really $44,000.00

Discussion in 'Model S: Battery & Charging' started by broncophil, Feb 17, 2015.

  1. AmpedRealtor

    AmpedRealtor Active Member

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    Yes I believe it was documented in late 2013 or early 2014 when an owner damaged his undercarriage and insurance paid for a new battery.
     
  2. Mr X

    Mr X Future Owner

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    That was the initial cost. I'm pretty sure it has dropped a little by now, but still expensive nonetheless.
     
  3. jerry33

    jerry33 S85 - VIN:P05130 - 3/2/13

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    And I believe it doesn't take into account a core refund.
     
  4. Matias

    Matias Active Member

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  5. ItsNotAboutTheMoney

    ItsNotAboutTheMoney Active Member

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    There's price,, and then there's the cost. Cost is a big secret.
     
  6. Panu

    Panu Member

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  7. Matias

    Matias Active Member

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    Yes, I think the idea in making profit is to sell with higher price than you self buy ;)
     
  8. Panu

    Panu Member

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    There is car selling price and there is part selling price. If you could build your Model S by buying the parts separately I believe you would pay something like 5 times the car price.
     
  9. Mario Kadastik

    Mario Kadastik Active Member

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    Yes, I have asked at some point for insurance purposes the cost of battery and it was 45000€. The reasoning I guess is that a battery would only ever be bought by insurance and as a battery sold means a car not built (I think Tesla is still battery constrained somewhat), then a sold battery has the full profit margin of a car. If Tesla has a GM of 26-28% on a 100k ASP car, then the profit has to be about 26k$. So if the battery costs about 20k$ for them to make, then they'd sell it for ca 45k$ and recover the full cars worth of profit. Once the gigafactory is online and battery packs are no longer a constraint I think Tesla will be willing to sell batteries for standard GM, not +120% :)
     
  10. scottm

    scottm Active Member

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    When Elon got into the business, the going rate for Lion battery was ~$600 per kW. He figured the raw materials (minerals, metals, etc) were about ~$80 per kW, and worked to close the gap.

    The bill of sale for my car split out the cost of the battery pack from the vehicle itself. And it was a $11k to $12K line item on the bill, in that range but I forget exactly what the number was.
     
  11. Panu

    Panu Member

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    That's the battery upgrade price from 60kWh to 85kWh which is not listed in new orders any more. The upgrade price includes supercharging and better warranty.
     
  12. mkjayakumar

    mkjayakumar Active Member

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    #13 mkjayakumar, Feb 18, 2015
    Last edited: Feb 18, 2015
    If it is priced over 150% of manufacturing cost - then that is the classical definition of price gouging, especially if Tesla is the only source from which you can buy that component. Tesla being battery constrained and all that is not an acceptable reason for that price gouging. For every 1000 Model S sold, they need to set aside x number of battery packs for replacements. This is especially true given that all the battery packs they are selling right now are only for replacements to existing Model S that has ended in an accident. It is not that someone can buy packs just for hoarding , or resell them on the free market..
     
  13. scottm

    scottm Active Member

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    #14 scottm, Feb 18, 2015
    Last edited: Feb 18, 2015
    OK, that makes sense. And it was in CAD dollars. Working it backwards then, say $11.5 minus the $2500 for supercharging, is $9000 for 25 kW of power, or $360 per kW for the upgrade. Making a 85 kW pack "worth" $30,600 if it was priced all as an upgrade to an empty pack. Factor in a cost for making the empty pack to stuff batteries in ... suppose it costs $2500 to manufacture the box.

    The "warranty" cost is free today, pay tomorrow, self-insuring risk that Tesla pockets as profit unless used.

    So it seems to reason a 85 kW pack would be around CAD $33,000. And that would be "profitable" pricing. Assuming Tesla is making money on 60kW to 85kW upgraded orders.

    I'll take a guess Tesla is out of pocket anywhere up to $14,000 in real bucks manufacturing and supplier costs to assemble that pack they'd be asking $33,000, or anything higher to foist into the market.

    The key question here is not what this all costs today. We're good for 8 years. The question will be "what can I buy in the future to get 85 kW or more into my model S, and how much is that?"

    Although this report was done in year 2000... have a look. It makes predictions. Did it come true?

    http://www.transportation.anl.gov/pdfs/TA/149.pdf

    Go to section 6.4 on page 43.
     
  14. Mario Kadastik

    Mario Kadastik Active Member

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    They set aside warranty reserves to satisfy customers who have warranty needs, but anyone buying only a pack is insurance or an idiot. Due to limited resources the price has to reflect alternate opportunity cost. If Tesla were not to sell you the battery they'd make a car and would get the above mentioned profit. There is no need or obligation for them to sell you the battery if they need the resources themselves. Being a business owner I wouldn't have a single shred of guilty conscience in the exact same situation and don't feel this as being price gouging as long as it's true limited resource case where Tesla loses a car in selling you a new pack...
     
  15. David_Cary

    David_Cary Member

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    150% of manufacturing cost is extremely generous. 500% would be price gouging (only because it is such a substantial portion of the car). I think the $18k estimate has been thrown out here (maybe based on 25% of new car price?) but I think that is in the ballpark. So the retail cost is about 250% of manufacturing cost - not bad. I think I remember the report that if you bought a car in parts it costs about 500% of a new car and you would still have to put it together. Since the manufacturer obviously makes money on a new car, the standard for pricing is well above 500%.

    The Leaf was out for almost 4 years before it was possible to buy a replacement battery. Presumably, if the battery got injured in an accident, the car was automatically totaled. Leaf drivers are so good, I don't think it happened..... Actually if the battery was damaged, the car was totaled even if the battery was cheap. Now we have $5500 and we (forum) feel that it is slightly subsidized or at least zero profit. The battery of an EV is such a hot button topic, Nissan rightly decided to not make money on its replacement.

    Honestly Tesla could give a lower price. They would lose out on some insurance money but might be better PR. How many times does the battery get killed anyway when the car wasn't going to get totaled anyway - mostly just the punctures which are now protected better from. Sell it for cost and it would give some people who worry about such things less to worry about - maybe the really high mileage drivers..
     
  16. mkjayakumar

    mkjayakumar Active Member

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    Exactly!!

    The bad PR on the $40k number will hurt them much more than the profit they might get on a handful of replacement battery sales due to accidents.

    Let's say 1% of 50k sales end up in accidents that need replacement batteries. With $20K profit on each that would be $10 million.

    Nissan did the right thing.
     
  17. David_Cary

    David_Cary Member

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    Speaking of bad PR, Christian Science Monitor just picked up the $44k replacement number and threw it on an article.

    A wave of Elon's arms - due to improved manufacturing cost control, we have slashed 50% off the price of the battery and it is now available for $22k. TSLA might go up 5% on such a "breakthrough".
     
  18. Saghost

    Saghost Active Member

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    It appears that Tesla has asked that much for one in the past as a replacement part. However, replacement parts are generally priced higher than the fraction of the new car price they represent, let alone manufacturing cost. Some years back one of the car magazines rather famously did an analysis that said that you could build your own $18k Ford Taurus from dealer parts - for $90k in parts without paying to assemble it.

    If you're wondering about the cost of production or fraction of the car's price, have a look here:

    Model S Battery Pack - Cost Per kWh Estimate

    Some folks did a very thorough analysis a couple years ago and concluded that it probably represented about $20k of the car's price back then, before Tesla and Panasonic built the economies of scale they have now (which also neatly matched the 25% quote from back then.)

    That includes some profit margin - Tesla's real cost is likely below that by a good bit, especially now. In a couple years the Gigafactory is supposed to drive costs down by at least 30%...
    Walter
     
  19. bonaire

    bonaire Active Member

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    Wasn't it said that Tesla does not run service as a profit center? Replacing a battery would fall under the service division along with pricing out the build and ship pricing plus labor of the battery replacement (a couple hours) and shipping of the replaced battery back to Fremont. Each battery shipped must have a serious price attached to the shipping, maybe $800 in the USA and more overseas due to the weight and handling. Then you have the cells, circuits and robotics and casings to build it. Cells alone are roughly $2.80 each, give or take some dimes, and so that is $20K plus casing, wiring, overhead of construction, circuitry, etc. Throw in $500 of labor to replace and you have to be near $30K minimum. Then if profit is to be found in this equation, tack on 30% profit for the replacement and you could be close to $40K+.

    Dropping the battery pack price by 30% with the GF does not mean a battery replacement drops all that much, maybe it also drops 30% so that would be $28K eventually?
     

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