Long-Term Fundamentals of Tesla Motors (TSLA)

[Model 3]

LG is suposed to have the cheapest high quality battery packs available and they are selling packs to GM for $225 per kWh. GM is buying a big volume to get that price.

GM: Chevrolet Bolt Arrives In 2016, $145/kWh Cell Cost, Volt Margin Improves $3,500

General Motors says the cost the battery cells in the company EV to be an “industry-leading” $145 per kWh.

Yes, I know this is cell-price and you said pack-price. But would the pack-price be so much higher then the cell-price?

 

[MitchJi]

GM: Chevrolet Bolt Arrives In 2016, $145/kWh Cell Cost, Volt Margin Improves $3,500

Yes, I know this is cell-price and you said pack-price. But would the pack-price be so much higher then the cell-price?

The $225 per kWh price is an estimate by GM's head of Volt production. So it was an extremely well informed estimate.

 

[dakh]

No, they're not much higher in complexity. I could assemble cells into a "complete solution" right this minute; it's *easy*.
Also, they're not selling complete solutions! They're currently not selling their own inverter, which is a key component to a "complete solution".

First, you're oversimplifying this in some significant ways. No you can't assemble a pack on your lap, it's not going into an RC model. Thermal runaway is real and has to be dealt with, which Tesla spent a lot of R&D for (and probably still does). You have to carefully match charge/discharge parameters in the BMS programming with the specific makeup of the battery and targeted usage pattern to hold up your warranty. You have to construct the pack to physically hold everything together and be cost-effective (imagine a fridge sized stack of cylindrical cells -- it's not that simple).

Second, "the machine that makes the machine" is a point of differentiation. Sure Panasonic has the part that cooks up individual cells (to Tesla's spec), but my understanding is that the rest of the pipeline from raw materials to finished packs is, to a substantial degree, designed by Tesla. And that is where they claim the "secret sauce" actually is that allows them to lower the production cost vs. the others.

Can someone rival them? Sure, in theory. Do they have a substantial edge over competition? That looks to be the case but we'll have to wait and see.

 

[schonelucht]

LG is suposed to have the cheapest high quality battery packs available and they are selling packs to GM for $225 per kWh. GM is buying a big volume to get that price. Tesla's costs will be under ~$125 per kWh by 2017. How is that competition?

When the battery storage market is taking off, the Chinese will not hesitate to sell below cost to stake out their share of the market.

 

[Krugerrand]

When the battery storage market is taking off, the Chinese will not hesitate to sell below cost to stake out their share of the market.

So? They can have the part of the market that is so price sensitive that they don't care it's a lower quality product that doesn't stand up and will have to be repurchased. It's not like it doesn't already happen in other sectors and it's not like we're unfamiliar with loss leaders.

 

[MitchJi]

When the battery storage market is taking off, the Chinese will not hesitate to sell below cost to stake out their share of the market.

At

GM: Chevrolet Bolt Arrives In 2016, $145/kWh Cell Cost, Volt Margin Improves $3,500


Yes, I know this is cell-price and you said pack-price. But would the pack-price be so much higher then the cell-price?

Tesla's Battery Pack Costs Are Cheaper Than You Think -- The Motley Fool

UBS analyst Colin Langan just hosted a conference call with Jon Bereisa, GM's former chief EV engineer and current CEO of Auto Lectrification, and Jeff Evanson, Tesla's head of investor relations, according to Street Insider. Bereisa believes that the Model 3 will be unprofitable at the $35,000 price point in part because of aluminum content and a wider range of sensors, but also because he estimates Tesla's pack costs at $260/kWh (he estimates GM pack costs at $215/kWh ).

Evanson's response was that Model 3 is not predominantly aluminum like the Model S and Model X, which Tesla had unofficially disclosed at the Model 3 unveiling (a Tesla rep confirmed Model 3 would be over 50% steel). More important, Evanson added that Tesla's pack costs are already below $190/kWh.

Both Langan and Bereisa were skeptical about the figure. Langan estimates that even at $190/kWh, Tesla's breakeven point for Model 3 would be a $45,000 to $48,000 price point. It would be quite a feat if Tesla is already at $190/kWh in pack costs, even before the Gigafactory is fully operational.

I was not surprised by the $190 per kWh figure because I had already determined based on Elon's and JB's comments that I was absolutely sure that their maximum possible was $190 but I also concluded that $170 is much more likely. Coupled with the recent news of the GF production increases I think that Tesla's costs will be under $100 per kWh by the time the M3 launches.

 

[electracity]

There's an "apples to apples" question too. What's the lowest realistic C rate on the Bolt? Is the 0-60 mostly pack or motor limited?

I assume Tesla ten year plan is not to produce the lowest price 200 mile EV, at least with the model 3 cell/pack technology.

 

[RobStark]

When the battery storage market is taking off, the Chinese will not hesitate to sell below cost to stake out their share of the market.

How has the Chinese government policy of subsidized dumping of Chinese solar panels worked out for them?

Are Chinese solar panel makers now making oligopolistic profits?

 

[Model 3]

Coupled with the recent news of the GF production increases I think that Tesla's costs will be under $100 per kWh by the time the M3 launches.

Just for the record: Are you still talking about pack cost? I have no problem with an estimate of under $100/kWh for the cell cost, but think it may be a bit low for the pack cost. But nothing would be better then if it gets that low...

 

[MitchJi]

Just for the record: Are you still talking about pack cost? I have no problem with an estimate of under $100/kWh for the cell cost, but think it may be a bit low for the pack cost. But nothing would be better then if it gets that low...

Yes. I believe that ny the time the M3 launches (end of 2017) that the pack cost will be under about $100,per kWh.

When they announced the GF they said, conservatively that the GF related cost reductions would be 30% by end of 2017, and 50% by the end of 2020.

Elon also said "moderate, not big or small" improvements due to cell chemistry. Over 18 months 5% in definitely moderate. That total is over 35%.

So if we use $185 per kWh as the current price (Tesla said under $190), and use 45% for the GF plus cell chemistry discount we get $101.75.

That's an extra 10%, but we have three places to make that up.
1. The initial 30% figure was conservative.
2. We know that that is too low because of the production at the GF is about 3x their original expectations.
3. We know that 5% over 18 months for the cells is probably too low.

 

[Fallenone]

Yes. I believe that ny the time the M3 launches (end of 2017) that the pack cost will be under about $100,per kWh.

When they announced the GF they said, conservatively that the GF related cost reductions would be 30% by end of 2017, and 50% by the end of 2020.

Elon also said "moderate, not big or small" improvements due to cell chemistry. Over 18 months 5% in definitely moderate. That total is over 35%.

So if we use $185 per kWh as the current price (Tesla said under $190), and use 45% for the GF plus cell chemistry discount we get $101.75.

That's an extra 10%, but we have three places to make that up.
1. The initial 30% figure was conservative.
2. We know that that is too low because of the production at the GF is about 3x their original expectations.
3. We know that 5% over 18 months for the cells is probably too low.

When they announced GF in 2014, their pack cost is $185/kWh? If so, they haven't improved one bit in two years. If not, you need to recalculate your number.

 

[dakh]

When they announced GF in 2014, their pack cost is $185/kWh? If so, they haven't improved one bit in two years. If not, you need to recalculate your number.

There's that and also from what I recall in one of the recent interviews it was stated there's a possibility of 3x volume but they also might not take it that far.

Personally I think it's not feasible to make cost estimates with any precision since we just don't have enough base information on what's going on.

 

[MitchJi]

When they announced GF in 2014, their pack cost is $185/kWh? If so, they haven't improved one bit in two years. If not, you need to recalculate your number.

Tesla called in and stated in a phone call in April 2016 that their pack costs are under $190 per kWh. That obviously has nothing to do with GF related cost reductions.

Here we go again. When I used Elon's statements plus understanding of basic cell chemistry to demonstrate that their pack costs were between $170-$190 per kWh you argued against that based on your feelings! You posted that ridiculous FUD and got some likes. Now that my figures have been confirmed by the phone call I mentioned you have learned nothing from your past foolishness.

Personally I think it's not feasible to make cost estimates with any since we just don't have enough base information on what's going on.

I believe that my figure is pretty close to the upper bound.

 

[Fallenone]

Tesla called in and stated in a phone call in April 2016 that their pack costs are under $190 per kWh. That obviously has nothing to do with GF related cost reductions.

Here we go again. When I used Elon's statements plus understanding of basic cell chemistry to demonstrate that their pack costs were between $170-$190 per kWh you argued against that based on your feelings! You posted that ridiculous FUD and got some likes. Now that my figures have been confirmed by the phone call I mentioned you have learned nothing from your past foolishness.

Their current below $190/kWh pack cost obviously has little to do with GF because they haven't started to produce packs for cars there yet. But you are using this number today as a base, and applying the 30% they said in 2014. There is definitely a discrepancy between their cost in 2014 and today. And the 30% lower cost should be applied to the number they had in 2014, which we have no reason to believe was below $190/kWh.

Edit:

OK I see your reasons behind this. 30% is the sole effect of vertical integration at GF, no matter what the base cost is. This makes sense.

 

[electracity]

Battery Supplier Deals Are Key to Lower EV Prices

 

[MitchJi]

OK I see your reasons behind this. 30% is the sole effect of vertical integration at GF, no matter what the base cost is. This makes sense.

Exactly. I apologize for being a jerk.

Thank you for your understanding!

 

[roblab]

When the battery storage market is taking off, the Chinese will not hesitate to sell below cost to stake out their share of the market.

As in the infamous flaming hoverboards this last Christmas?

 

[dakh]

I believe that my figure is pretty close to the upper bound.

That's true but I'm not sure how useful that is. From the smug faces of Elon and JB when they talk about it I think they're thinking WAY lower. For example, the fact that they now have figured out how to essentially save over 50% on the GF building itself, how does that affect the cost? Does that also mean they figured out more automation and will save on on-going labor costs?

Do I remember right a figure of $60/kWh for raw materials (using who knows what chemistry)? That would bracket the price nicely but then again we don't know how much they're going to be able to squeeze raw materials price with their ridiculous volume. Also with capacity improvements both raw materials and manufacturing cost per kWh decreases proportionally so even materials cost is a moving target.

 

[Johan]

Exactly. I apologize for being a jerk.

Thank you for your understanding!

That is beautiful stuff right there. A bromance in the making?

 

[neroden]

LG is suposed to have the cheapest high quality battery packs available and they are selling packs to GM for $225 per kWh. GM is buying a big volume to get that price. Tesla's costs will be under ~$125 per kWh by 2017. How is that competition?

We don't know LG's profit margins, now, do we?

Also, even if Tesla somehow has a *much much cheaper production method*, it's going to be hard to keep all their advantages secret, and reasonably straightforward to copy it. I would not expect that level of advantage to last more than, say, 5 years. (Even if they patent the method, because China will ignore the patent.) Chinese battery companies are *hungry, eager, and fast-moving*, unlike the remarkably complacent Western automakers.