June 20th Speculation

[ShortSlaver]

Great, that will make it easy to avoid. My big concern is that they might try to bake the battery swap scheme into the price of the car and force everyone to subsidize it.

You and I have been the most vocal "meh" voice around battery swapping. I think you can agree that as a demo it's great as it shows potential and if there is a demand they will do it - that's great. I'm happy they aren't rushing into some contrived battery swapping strategy.

We don't need the Apple Cube here.

 

[Curt Renz]

A huge market for battery swaps will be taxi companies. They run their cars in two or three shifts, which limits the time for refueling. Fuel is their big cost and the price would plummet, if they had a fleet of electric cars with available battery swaps. They could have the swap stations in their own garages and simply circulate their own batteries. It may also result in lower taxi fares, which would increase the demand for taxi rides and therefore a need for more taxies. It's a big win for the taxi companies, their passengers and Tesla Motors.

 

[Palpatine]

You and I have been the most vocal "meh" voice around battery swapping. I think you can agree that as a demo it's great as it shows potential and if there is a demand they will do it - that's great. I'm happy they aren't rushing into some contrived battery swapping strategy.

We don't need the Apple Cube here.

I would agree with that. Even Apple had their dud products. Tesla and Elon have made their share of foolish moves in the past.
Luckily they knew when to throw in the towel and cancelled items that make no sense, such as the PHEV version of the Model S (similar to Fisker/Volt)
Also they cancelled the 40 kwh Model S, which funny enough is the version of the Model S that might actually have had the most need for the battery swap because of the low range.

My guess is that when it comes down to paying for a battery swap, people won't pay the fee/subscription and just use the free Supercharger.
The question boils down to this: 5 minutes vs 15-20 minutes how many will pay $50 to $100 for a swap to save 10-15 minutes?
Then Tesla will realize that there just isn't enough demand to justify the $500,000 investment for a swap station or the ongoing staffing/support/maintenance that goes along with a battery swap station.

- - - Updated - - -

A huge market for battery swaps will be taxi companies. They run their cars in two or three shifts, which limits the time for refueling. Fuel is their big cost and the price would plummet, if they had a fleet of electric cars with available battery swaps. They could have the swap stations in their own garages and simply circulate their own batteries. It may also result in lower taxi fares, which would increase the demand for taxi rides and therefore a need for more taxies. It's a big win for the taxi companies, their passengers and Tesla Motors.

Yeah, as soon as taxi companies start buying $80,000 cars then I guess you might have something there.
On the other hand, taxis also spend a lot of time waiting at hotels or airports waiting for their next fare. So maybe if there were taxi companies using EVs, they would strategically locate those rechargers where taxis wait for fares.

 

[deonb]

A huge market for battery swaps will be taxi companies. They run their cars in two or three shifts, which limits the time for refueling. Fuel is their big cost and the price would plummet, if they had a fleet of electric cars with available battery swaps. They could have the swap stations in their own garages and simply circulate their own batteries. It may also result in lower taxi fares, which would increase the demand for taxi rides and therefore a need for more taxies. It's a big win for the taxi companies, their passengers and Tesla Motors.

At $500k per swap station and $20k per battery, why not just buy 5 to 10 extra taxis and rotate them?

 

[ShortSlaver]

I would agree with that. Even Apple had their dud products. Tesla and Elon have made their share of foolish moves in the past.
Luckily they knew when to throw in the towel and cancelled items that make no sense, such as the PHEV version of the Model S (similar to Fisker/Volt)
Also they cancelled the 40 kwh Model S, which funny enough is the version of the Model S that might actually have had the most need for the battery swap because of the low range.

My guess is that when it comes down to paying for a battery swap, people won't pay the fee/subscription and just use the free Supercharger.
The question boils down to this: 5 minutes vs 15-20 minutes how many will pay $50 to $100 for a swap to save 10-15 minutes?
Then Tesla will realize that there just isn't enough demand to justify the $500,000 investment for a swap station or the ongoing staffing/support/maintenance that goes along with a battery swap station.

I believe the whole thing is just a dog and pony show to make people gossip and create some "gee whiz" effect - which is great. Lets face it, the public needs as much education on EV's as anything. This concept, although not economically viable right now, gives a lot of people peace of mind in terms of maintenance, breakdowns on the road, repairs and automobile lifetime. It makes buying a used Tesla a good idea as the only real risk is the battery which can be replaced near cost. Labor cost is almost null. Imagine dropping a new block in your car - that would be thousands.

I think it's a helpful demo showing the strengths of the car. I'm happy Tesla isn't going whole hog on some swapping strategy as I'm sure you are too. That would be silly.

I have to keep reminding myself - Elon Musk knows what he's doing. He isn't perfect, but he knows more about this game than me. I'm just a humble investor.

 

[kenliles]

I believe the whole thing is just a dog and pony show to make people gossip and create some "gee whiz" effect - which is great. Lets face it, the public needs as much education on EV's as anything. This concept, although not economically viable right now, gives a lot of people peace of mind in terms of maintenance, breakdowns on the road, repairs and automobile lifetime. It makes buying a used Tesla a good idea as the only real risk is the battery which can be replaced near cost. Labor cost is almost null. Imagine dropping a new block in your car - that would be thousands.

I think it's a helpful demo showing the strengths of the car. I'm happy Tesla isn't going whole hog on some swapping strategy as I'm sure you are too. That would be silly.

I have to keep reminding myself - Elon Musk knows what he's doing. He isn't perfect, but he knows more about this game than me. I'm just a humble investor.

I think that might be the case as well, but it doesn't come for free. The demo and commitment of capability in itself confers to the consumer that you may not be satisfied enough with the speed of SuperCharging. In other words a tacit admission that charging may never achieve the speed of ICE refill. I'm not of the opinion this is a net positive to the consumer, even with an impressive demo

 

[markb1]

The question boils down to this: 5 minutes vs 15-20 minutes how many will pay $50 to $100 for a swap to save 10-15 minutes?

I don't think this is a fair comparison. The most energy you can possibly get in a 20 minute charge at 120kW is 40kWh. The most you can get from a 5 minute battery swap is 85kWh. If you want that much from a super charger, it might take an hour due to taper off.

 

[serkol]

At $500k per swap station and $20k per battery, why not just buy 5 to 10 extra taxis and rotate them?

What if the swap station costs $250k, and the battery costs $15k, and they need 10 extra batteries to have time to charge them in time for the next swap? That would come $250k + $150k per 50 cars = $8k extra investment per a $80k = 10%. Would you approve that?

Yes, if there's a supercharger in their garage, they can have 10 extra taxis and rotate them. Or they can have a swap station and 10 extra batteries. I don't know for sure what's better.

 

[ShortSlaver]

I think that might be the case as well, but it doesn't come for free. The demo and commitment of capability in itself confers to the consumer that you may not be satisfied enough with the speed of SuperCharging. In other words a tacit admission that charging may never achieve the speed of ICE refill. I'm not of the opinion this is a net positive to the consumer, even with an impressive demo

I'm more interested in the resale, maintenance and upgrade capability than the charging comparison.

I think it's a nice thing for that case and charging serves an entirely different case.

 

[brianman]

Oh well. Musk has said he's not a fan of swapping

That is very much not what he said.

 

[Palpatine]

Originally Posted by Palpatine
The question boils down to this: 5 minutes vs 15-20 minutes how many will pay $50 to $100 for a swap to save 10-15 minutes?

I don't think this is a fair comparison. The most energy you can possibly get in a 20 minute charge at 120kW is 40kWh. The most you can get from a 5 minute battery swap is 85kWh. If you want that much from a super charger, it might take an hour due to taper off.

It is fairly clear that the typical person pulling into a Supercharger / Battery Swap station is NOT arriving at that location with a battery at empty on the final electrons.
The typical person likely has some percentage of battery charge in the pack. So it works both ways. Most people are just going to be topping off to 80%, then moving on with their trip.

For me, my nearest 3 superchargers (3 different directions) will be 65 miles, 80 miles and 107 miles away. So I will be arriving with well above a 50% charge when I plug into a Supercharger. So what amount of time would I be there on a Supercharger? 10 minutes? It depends on my ultimate destination. So my choice would be:

a) free supercharger for 10-15 minutes (while I use the restroom, get a drink)
or
b) expensive battery swap in 2 minutes (then pull into a parking space to use a restroom, get a drink, still spending 10-15 min overall at that location)

Yeah, that is a tough choice to make.

When you also consider that:
Only 2% of car trips are more than 50 miles.
Only 1% of car trips are more than 70 miles.
The number of car trips that are 200 miles? About 0.1%

http://www.greencarreports.com/news...ips-could-be-made-in-electric-cars-says-study

So with that in mind, who exactly is going to foot the bill for this concept? The 0.1% of users? Someone has to pay that bill of $100 million to get the swap stations out there, plus staffing/maintenance/support, battery consumption, etc. This is not just a cost for 85 kwh of electricity. I would be shocked if the real cost is anywhere close to "$100" for a swap. The real cost to recover the capital investment and pay for ongoing support is likely way more than $100 per swap.

 

[austinEV]

It burns, right?

I renounced that theory a few days ago. And yeah, it was speculation time.

 

[DaveT]

I've been talking about this for a few days on my battery swap is coming thread, but for those that haven't read it: I suspect that the cost to participate in the battery swap program is the exact same fee previously announced for the battery replacement program. That is to say that the battery replacement program IS the battery swap program.

I'm fairly convinced of the same thing. The battery replacement program is the battery swap program.

Here's how it works:
You pay $12k now for a new battery in 8 years but you get free battery swap (unlimited) during that 8 years.

To make it even more compelling to owners Tesla could say:
You pay $12k for a new longer-range-than-your-original battery in 8 years (60kwh owners will get a 85kwh battery and 85kwh owners will get a 110kwh battery), plus you get free battery swapping for those 8 years.

If they did that, I think it would attract a lot of interest from owners and they could possibly sign up 25% of owners.

If they just did $12k for a new same-as-your-original battery and free battery swapping, I don't see more than 10-15% of owners signing up for that. It just isn't as compelling as getting a bigger-than-your-original battery in 8 years.

If they offered a size up in battery for the 8-year replacement, then that would attract a lot more owners and that would be added income where they could use as CapEx to roll out the swap stations at the Supercharger locations.

Here are the rough revenues
2013 - 25% sign up for $12k option out of 15k new U.S. owners = $45m
2014 - 25% sign up for $12k option out of 15k new U.S. owners = $45m
2015 - 25% sign up for $12k option out of 25k new U.S. owners (inc model X)= $75m

You have $165 million in revenue for just the first 3 years in the U.S. and this would more-than-enough pay for the complete battery swap rollout (Elon today in the Reuters interview estimated $50-100m for battery swap rollout nationwide). Even if 15% of people sign up you'll still have $99m in revenue in the first 3 years (this would cover entire U.S. battery swap rollout according to Elon's estimates given today). If 10% owners sign up you'll have $66m in 3 years (this would be fine because Tesla would roll out battery swap slower than the Supercharger stations and could take 3-5 years to complete battery swap roll out).

In terms of how they could offer a bigger-than-your-original battery in 8 years:
Elon has said in a previous talk that they're seeing at least a 10% decrease in battery pack costs every year (I think this was at the 2012 shareholder meeting). This means in 7 years the battery pack will be 1/2 as expensive as now. Also at the end of 8 years you give them your old pack which they can then retrofit (they might just need to change out the cells) as a refurbished unit. If they can make a 110kwh battery pack for $14k ($100/kwh x 110kwh = $11k plus $3k in pack expenses) in 8 years and then if they realize 2k of savings from the battery pack you give them, then that costs Tesla $12000. Basically it's the cost of what they received 8 years earlier, and they chose to use that money to roll out CapEx with battery swap stations that would increase future demand of a pre-paid battery replacement (and free swap) program. So it would be a good investment of their money to basically generate a growing future revenue source.

The point of all this is that Elon knows that he needs to offer a compelling value to owners for battery swap to make sense. And I think he could offer that.
1. $12000 for a bigger-than-your-original battery in 8 years with free swapping during that time.
2. Battery swaps are done at Supercharger stations in under a minute.
3. You can do unlimited number of battery swaps in the program.
4. This is an option. If you don't want it, you don't have to order it.
5. To do your final swap at the end of the 8 years, just go to a Service Center and they're have a new battery ready for you in their swap station for you.
6. At the end of 8 years, you can choose to renew your battery replacement (and free swapping) program for a fee. It would give you another new better-than-original battery in 8 years and free swapping during that time. The fee would be much lower than the $12000 that it costs today because battery costs would be much lower than. So maybe $6k-8k to renew.

Last thing is that Elon Musk in the Reuters interview said that Shai Agassi (Better Place) was good at marketing but not good in technology and didn't execute swapping well. This leads me to believe that Tesla's technology of battery swap will be far superior than what Better Place rolled out. It will be quicker and cheaper to deploy.

Update 1: Some people have shared that there's no way to pay for the battery replacement program that was previously announced. I'm thinking (along with others) that this is because there are more details (ie., battery swap for free) to be announced on June 20th. Is Tesla Still offering the battery replacement option?

Update 2: Here's the link to my original thoughts on the 5th announcement, June 20th Speculation - Page 11

Update 3: "Tesla will first test the swap program in high-traffic corridors between Los Angeles and San Francisco as well in the Washington-New York-Boston region." - Reuters

 

[Curt Renz]

Yeah, as soon as taxi companies start buying $80,000 cars then I guess you might have something there.
On the other hand, taxis also spend a lot of time waiting at hotels or airports waiting for their next fare. So maybe if there were taxi companies using EVs, they would strategically locate those rechargers where taxis wait for fares.

Taxi companies are businesses and must consider the full cost over the lifetime of owning a car. Obviously, the fuel is much cheaper with a Tesla. So is maintenance with a simple electric motor and braking mainly done by taking one's foot off the accelerator and sending energy back to the battery. Those key components should be quite long lasting. The same for the body which is composed of non-rusting aluminum rather than steel. Resale value should be quite high. Even if the battery is degraded, future replacements for the used car owner are likely to be more powerful yet cheaper.

Your hotel and airport recharging idea makes sense with a Supercharger type setup. But it's at the taxi company garages that the battery swapping would likely be done.

 

[kenliles]

The battery is by far the most and only expensive, care-vulnerable, abuse-devalued, heart-part on a Tesla.
If I owned one (and when I own my GenIII) I wouldn't even consider swapping spit or battery with unknown disease in exchange for a few minutes I'd rather spend at the burger joint anyway.
Batt-Swap-Hero: Not a fan, don't get it, except as a demonstration of technical orgasm.

 

[toastypasta]

I don't get why people hate on the concept of battery swapping.
If Tesla and Elon personally were willing to stand behind the value of the Model S by matching the resale value of the next comparable luxury sedan. Why do people think Tesla would do different here? Tesla will for sure guarantee the battery. They will definitely keep it in good condition and refurbish if needed but all along making sure that every swapped battery maintains the performance of the car you own and love.

 

[kenliles]

I don't get why people hate on the concept of battery swapping.
If Tesla and Elon personally were willing to stand behind the value of the Model S by matching the resale value of the next comparable luxury sedan. Why do people think Tesla would do different here? Tesla will for sure guarantee the battery. They will definitely keep it in good condition and refurbish if needed but all along making sure that every swapped battery maintains the performance of the car you own and love.

Not saying I hate it, saying I'm too dumb to get the benefit vs risk model. It's a few minutes on multi-hours or days trip. If that time is worth that to me, I'm on a plane. To me, the battery health is equivalent to the engine health on ICE. Swapping the engine on my car would be like swapping the car, all to save a few minutes so I can eat in the car instead of a restaurant. To my brain, its a dumb trade I wouldn't consider, but like I said, this brain is way too dumb to get it.

But it's true if you could demonstrate swapping an engine in 2 minutes, I'd be impressed as hell you could do something I'd never consider doing. Nice engineering feat, for no good reason to me.

 

[c041v]

At $500k per swap station and $20k per battery, why not just buy 5 to 10 extra taxis and rotate them?

Probably because of things like this;
Why taxi medallions cost $1 million | Felix Salmon

 

[cb32000]

What if you think of it like cell phone roaming charges.

In you home area you charge at home.
When you go on a long trip you can go to your local service center swap your battery for a rental battery or have it done at home (all for a reasonable fee) maybe getting a longer range with the latest chemistry and you have the choice of supercharging it or swapping it on the road. Maybe you are charged 15-20 dollars per 100 miles for unlimited swapping. The battery could have a longer range and cost much more for Tesla since they make money on the rental.
Since this is for the small percentage of times you are out of your home area the cost is not as important.

 

[Palpatine]

Swapping the engine on my car would be like swapping the car, all to save a few minutes so I can eat in the car instead of a restaurant.

But it's true if you could demonstrate swapping an engine in 2 minutes, I'd be impressed as hell you could do something I'd never consider doing. Nice engineering feat, for no good reason to me.

That was my thought from the start. I'm thinking, "Why on earth would I want a 2 minute battery swap after driving 2-3 hours on the road? The first thing I would do after swapping the battery is pull into a parking spot so I can goto the bathroom, get a drink, get some food, etc." So if I am parking there already for 10-20 minutes, explain to me why I would pay extra for a battery swap?

There is a reason we don't swap the gas tank on an ICE. Yeah, I am sure it is possible and you could get going in 60 seconds. But are you willing to pay 3x more for that gas tank swap option to save a few minutes?
People complain about gasoline going from $3 to $4 per gallon. Do you really think they are just going to piss away extra thousands of dollars on low value options like battery swaps?