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Model S Battery Pack - Cost Per kWh Estimate

CapitalistOppressor

Active Member
Jun 18, 2012
1,622
0
First of all, special thanks to Stopcrazyapp for some help on technical information on batteries, which really helped clarify a number of things for me.

Hey Kids, Don't Try This At Home!

I've been working lately on modeling costs for the battery pack for the Model S, both to get a sense of how it impacts Tesla's margins, as well as to understand how it's going to affect the CES concept that they appear set to roll out.

It turned out to be quite a bit more difficult than I expected, and the information I am going to present is far from definitive. So feel free to poke holes in this as you see fit. This is a working thread, and this post is just a starting point.

First, lets just get one point out of the way. There is no catalog that lists the cost of the Tesla battery. For that matter, there isn't a handy guide for the individual cell costs either (or maybe I just missed it). To generate a credible estimate you have to gather data, perform some analysis, and spice it up with speculation.

I will present some data in a moment, but I'll ruin the surprise a bit by stating that the available data (to me anyways) is highly variable and contradictory to the eyes of a layman like myself. So it's helpful to try and establish boundaries, and see if we can narrow the range of where we are likely to find our answer. As a layman, the first way I try and do that is to see if folks who may be smarter than me have studied the issue and said or written something about it.

Setting Boundaries - Media Style

For instance, its often been reported in the media that the cost per kWh for the Model S is $400/kWh. By itself, that is an impressive number, because it is much cheaper than any other automotive battery. At the time the Model S came out, the battery for the Leaf was estimated to cost $18,000, or ~$750/kWh. So obviously the Model S is amazing with it's $400/kWh cost. But how did the media get that cost?

I wont cite it, because its not important, but they got the cost by looking at the cost difference between the 60kWh and the 85kWh Model S. The cost difference is $10,000, which works out to $400/kWh for the 25kWh of storage.

Even as recently as last week media reports were citing this number. The problem is that the cost difference between the two cars is a retail price, and tells us nothing about the cost to Tesla. Nevertheless, the cost difference is a very useful metric to bound the data that we will come back to.

Goldman Sachs

Beyond the media, we've had highly paid financial analysts estimate the pack cost. In 2012 Goldman Sachs estimated that the pack cost Tesla $22,500 -

Is Trouble on the Way for Elon Musk and Tesla?: Video - Bloomberg

With an 85kWh battery that works out to ~$265/kWh. Goldman Sachs is a reasonably credible source, but we don't know how they arrived at the number, and its from 2012, so its slightly dated.

Elon and Company

In 2010-2012 various Tesla related sources (including Elon) have said they expect the pack to be delivered for under $200/kWh -

Cheap batteries will make the Tesla Model S profitable at 20,000 annual deliveries - egmCarTech
Endless-sphere.com View topic - Tesla pack costs $200/kwh? Tipping point price?

An 85kWh pack would cost around $17,000 at this price. Note also, they are saying pack cost, not cell cost.

International Trade Groups

The IEK did a report at the end of 2012 stating that 18650 cells (not limited to Panasonic) were running between $120-$200/kWh during Q3 when Tesla was first beginning production -

Global Li-ion Cell Shipments to Increase 9% in 2013: IEK-ITIS | CENS.com - Taiwan Industry Updates | Industry In-Focus | HTML |Ta1-CaE-Dy2012/12/03-Id42230

Smarter Media Method

We can do some speculative bounding in a few different ways.

First, going back to the media estimate of $400/kWh, we can refine that methodology in a couple of ways. For instance, we now know that $2,000 of the cost difference is the SuperCharger fee. Doing media math we get $320/kWh, based on the actual $8,000 price difference.

Again though that is a retail cost. The retail rule of thumb is that the retail cost is twice wholesale. That gets us to $160/kWh.

Science!!

Or, turning away from speculation we can go all scientific on the problem. Here is a definitive paper from 2000 -

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

And a must read writeup for the layperson that references the above paper -

http://www.tms.org/pubs/journals/jom/0809/daniel-0809.html

Bottom line is that in 2,000, the reference design was a 18650 1350mAh cell, with a materials cost of $1.28, and a production cost of $0.42, with total cost being $1.70/cell. The big problem that the authors identified was the need for the material and production costs to come down, which they expected to happen as mass production got rolling.

If you take that estimate, and compare it to information contained in this terrible (but must read) story by a clueless fool, you can maybe use it to (very) roughly project the costs from the 2,000 study into 2013 -

Lithium-ion batteries for autos | Future growth same as historical

This is the most important graph -

japan-price-per-kAh-(yen)-lithium-ion-batteries_m.png


Looking at the fall in costs between 2,000 and 2012, we can estimate that costs are approximately 1/6th of what they were. If you figured that power density has (very) roughly tripled from 1350mAh to 3100mAh, then you can (very) roughly guess that costs must have fallen by half, to around $0.85/cell. Doing that gets you battery costs that are (very) roughly 1/6th of the conditions studied in 2,000. A bastardized methodology to be sure.

Moving on...

Because the initial estimate was just the basic costs to assemble a battery (as opposed to run a business) we will apply a simple rule of thumb markup and double the cost to find a (very) rough wholesale estimate of $1.70/cell for our current generation 3100mAh cell.

FYI, a thread somewhere says that Elon has estimated the lowest possible cost of the li-ion cells to be around $0.80 right now. I don't feel like running down the citation, but it's out there. If some bastardized method of analysis gets me within shouting distance of something Elon said, I'll take it.

Time To Build A Pack

Ok, we've set some boundaries, whether per/kWh or at the cell level. The next step is to simulate a pack so we can go shopping for cells and see how much it costs. The first problem with this is that there is an active controversy about many aspects of pack design. Some folks think that Tesla is using ~7,000 NCR18500B 3400mAh cells. Other's think Tesla is using some other number of cells.

For purposes of my simulation I will be using 7,968 modified NCR18650A 3100mAh cells for the 85kWh car. That works out to ~88.9kWh of storage, with the normal operating SOC being between 5%-95% (which on your indicators correspond to 0-265 rated miles).

This simulated pack is consistent with how the Roadster pack operated, characterizes the amount of emergency range you have below zero (thank you Broder), and leaves the upper 5% forever untouched. From this simulation, and knowing that power is reduced by half when the Model S enters emergency mode, we can guess that the Model S might be capable of traveling 20-30 miles after being computer limited to ~45mph in an emergency. Again, this is consistent with what Broder experienced. You are welcome to simulate your own pack, but I have a reasonable level of confidence in my pack design, so I'm going to go with it.

So knowing how many cells I am looking for, now I need to find a per cell cost. And with an ~89kWh car we need to modify the "promised" price of the Model S pack to ~$17,800 ($200/kWh).

Data, Data, Data!!

Knowing I want 7,968 NCR18650A 3100mAh cells, I did like Denzel in American Gangster and hopped onto a metaphorical Google flight to China to buy the product at the source, and eliminate as many middle men as possible. In various back alleys of Shenzen, where Panasonic appears to do most of its assembly, I found a massive variation in pricing. Many vendors are quoting prices for these batteries at $1-$10 depending on how many millions you are prepared to buy.

Theoretically, these prices are dependent on the quantity you want. You get the best price by purchasing large numbers on a regular basis. So a contract to purchase 1 million per month for the next year might let you purchase the item for $1/cell, while if you buy just the minimum purchase it's more like $10/cell.

However, as Stopcrazyapp pointed out when I linked him an example, many of these price ranges were probably placeholders for related models. When I attempted to contact the sellers, nobody was willing to give me pricing information. Maybe some of you can try and succeed where I failed.

So I dug deeper by clicking on every vendor I could find, and then going through their whole product line to see if they had other prices advertised with better differentiation. I also ignored the possibility that these batteries cost $1, because when I sifted enough prices, I found that batteries costing that much were probably older cells (like 2400mAh), while I started to find credible hints as to pricing for our target cells.

Here are numerous examples of links that I think are good bets to represent actual wholesale pricing for the 3100mAh cells, because in most cases, these prices were differentiated from other prices in that distributors product line. I also included a few 3400 cells for flavor (and because they had a different price from the same distributors 3100 cells) -

Original Japan li-ion rechargeable 18650 battery with 3100mah

18650 cells 3100mAh Li-ion Pana sonic 18650 battery rechargeable battery

NCR18650A 3100mah 3.7v lithium battery with cheap price, View NCR18650A 3100mah 3.7v lithium battery, panasonic Product Details from Shenzhen Victpower Technology Co., Ltd. on Alibaba.com

Panasonic 3100mah NCR18650 3100mAh 3.7V protected Rechargeable Li-ion Battery, View Panasonic 3100mah, Panasonic Product Details from Shenzhen Listman Technology Co., Limited on Alibaba.com

panasonic cgr 18650 3.7V 3100mAh

Panasonic NCR18650A 3100mAh 3.7V

18650 panasonic high power battery 3400mah

3.7V NCR18650b lithium ion 3400mAh rechargeable battery

Li-ion 18650 battery panasonic NCR18650A 3100mAh

NCR18650A 3100mAh 18650 Lithium-ion battery cell, View 18650 protected li-ion battery, other Product Details from Shenzhen Julibao Battery Co., Ltd. on Alibaba.com

In general, the most credible target price I could find (without someone willing to just tell me) showed most 3100mAh pricing right around $2/cell, and a number of those distributors were offering 3400mAh cells for $2.50/cell. There were more distributors offering 3400 cells for $3-$4/cell though, mainly I think because it is a newer cell and is selling for a premium in many markets.

When we translate those numbers into per/kWh, we see prices of around $179/kWh for the 3100mAh cells, and $204/kWh for the 3400mAh cells (only a couple of entries showed differentiated prices at this level. Most were more like $250-$300/kWh). $179/kWh is around where we need to be, considering that Tesla has all but promised to deliver a finished pack for under $200kWh.

Also, 7968 cells will cost ~$15,936 @ $2/cell, so that leaves us with nearly $2,000 to build the pack and come in under the $200/kWh budget.

However...

The $2/cell cost is what any schmoe off of the street who is willing to buy a few thousand cells gets to pay. Tesla is purchasing ~4% of all commodity C3 li-ion cells this year.

When you cut away non 18650 cells, generic (non-Panasonic) 18650 production, and look only at Panasonic production of NCR18650A 3100mAh cells (there are many other brands who manufacture in the 18650 format), you see that Tesla is one of the largest purchasers of these cells in the world, and will likely purchase ~147 million of them in 2013.

So Tesla is not just some schmoe. In fact, in 2010 Jeffery Straubel was invited to the new Fab in Japan, where he was personally handed the very first NCR18650A 3100mAh cell to be produced. By the President of Panasonic Energy Company. Panasonic has a significant investment in Tesla, and has a seat on their board.

Panasonic's 3.1Ah batteries to be used in the Tesla Model S, have highest energy density yet

Not even close to being some schmoe.

But That's Not All!

In addition, as I detailed in this thread -

Amazing Core Tesla Battery IP - 18650 Cell

Tesla has designed a radically simplified cell. In comparison to the stock cells, these should be absurdly easy to manufacture. There should be really significant savings from such a radically simpler design.

So if you look back at our "scientific" method, we came up with a projection that was consistent with a basic manufacturing cost in 2012/2013 of around $0.85/cell, and we doubled that to $1.70 to find a proposed wholesale cost. The actual wholesale cost appears to be in the neighborhood of $2/cell, which is broadly consistent with this model. So Tesla's cost should lie somewhere between the basic manufacturing cost, and the wholesale cost, and they get bonus points for having a lower start value on the manufacturing cost.

For my part, the more I massage the moving parts, the more I like a smart version of the initial media calculation I presented at the beginning of this post. Tesla is charging $8,000 for 25kWh, or $320/kWh. A normal retail markup for the pack would imply a finished pack costing ~$160/kWh, or $14,240 for the 89kWh pack that I am simulating.

So My Assessment Is -

Tesla is using an ~89kWh pack that requires 7968 cells.

If you assume Tesla is paying ~$1.50/cell, that gives you a total cost for the cells of $11,952.

If you spend ~$2,000 to integrate it into a finished pack, it gets you right in range of the $14,000 pack cost of the smarter media calculation.

BTW, if you think $2,000 is too low to mass manufacture a few stamped and milled pieces of aluminum, wiring, cooling and electronics for the pack enclosure, then I think you are high :)

Feel free to make your own assessment.

Cost of a New Replacement Motor + Transmission For A BMW: ~$35,000-$40,000

Short Engine. S85B50A. Short Engine. BMW # 11000443598

Rmfd-6 speed gearbox. GS6-53BZ - THA9. Manual Transmission GS6-53BZ. 2012 BMW M5 # 23007606343


Sorry, couldn't help myself after watching the Bloomberg video that I linked with the Goldman Sachs reference. I just couldn't believe how shocked they were at the costs they were imagining for Tesla's battery, which is by far the most expensive part of the Tesla drivetrain :)


Big Edit 12/15/2013: Appending this post from down-thread to give the current best estimates for what we now believe to be a 7,000 cell pack using the modified 3.4aH Panasonic cells (instead of the 3.1aH cells in the OP). This change results in a higher pack cost (because the cost/kWh of the cells is higher) but a lower weight. These estimates are based on more information (not to mention debate) than available in the OP, but they are still just a rough estimate.

I am just putting this here for quick reference, but I recommend users with the time read the thread because there is a ton of good information and discussion that goes beyond just the price of the pack (especially in terms of the requirement and costs costs to Tesla to build a giga-factory). For that matter, this is still a working thread with new information coming in that we are actively debating.


Back to cost and other issues, I've been pecking away at costs using a 7,000 cell model.

My quickie maximum cost simulated pack using our known constraint (less than a quarter of the cost of most models) is this -

60kWh Pack
  • 4992 cells 3.4aH cells
  • 61.1kWh
  • $3 Cell Cost
  • Pack Cost - $2,500
  • Total Cost - $17,476


85kWh Pack
  • 7,104 3.4aH cells
  • 86.95kWh
  • $3 Cell Cost
  • Pack Cost - $2,500
  • Total Cost - $23,812

This is a maximum price simulation that is consistent with our constraint. Current Trendforce wholesale price data points to a per cell cost of ~$3 for 3.4aH cells ($0.90/aH) but we've established plenty of reasons to suppose that Tesla is paying less than wholesale price.

If you assume a pack cost of $2,500 (which I am quite comfortable with) the lowest cell cost consistent with our constraints is $2.50, which happens to have been our best guess for 3.4aH cells based on Alibaba prices discussed up thread (edit: in the OP actually). That is a per cell cost of ~$205/kWh and a total cost in the ~$233/kWh range under this scenario.

Under those assumptions, every model except the base 85kWh (with no options) has a pack cost under 25% of the cost of the vehicle, which satisfies the constraints discussed by Straubel in the MIT piece. In addition, the "best case" is broadly consistent with the original IEK data discussed in the OP as well as a profuse amount of speculation and research.

Therefor, I think a better simulation is this -

60kWh Pack
  • 4992 cells 3.4aH cells
  • 61.1kWh
  • $2.50 Cell Cost
  • Pack Cost - $2,500
  • Total Cost - $14,980

85kWh Pack
  • 7,104 cells 3.4aH cells
  • 86.95kWh
  • $2.50 Cell Cost
  • Pack Cost - $2,500
  • Total Cost - $20,260

Edit: marked it up to add links
 
Last edited:

scaesare

Well-Known Member
Mar 14, 2013
8,446
14,279
NoVA
I have nothing of value to add in the way of data or analysis, but I wanted to chime in and say thanks, that was a fascinating read.

Actually, on second thought, I have one question: You are estimating the 85KWh (usable) pack is actually an 89KWh pack. You later said:

"This simulated pack is consistent with how the Roadster pack operated, characterizes the amount of emergency range you have below zero (thank you Broder), and leaves the upper 5% forever untouched."

Were you extending your analogy to say that we know with reasonable certainty that the roadster pack was in fact larger than advertised? How certain are you that the operating reserve os really ~4KW above the 85KWh rating, and not simply that normal use is ~5KWh below the rated size?

Thanks again for the work on this (and your other analysis posts, such as the Battery IP thread).


 

aznt1217

Active Member
Aug 27, 2012
2,556
1,832
New York, NY
Great in depth analysis.

I believe Tesla actually pays a lot less for cells. The same cells are used for battery packs for Solarcity which we also know is growing a fairly large amount. Economies of scale is everything as you mentioned.

To the post above, I think it's believable that there is reserve power. Most cars do this these days with buffers for Empty tanks, it just makes sense.
 
Excellent read. Well done.

I'm sure most Tesla believers on this forum will agree to believe that Tesla will be the leader in battery technology moving forward. I strongly believe they will provide innovation to batteries, charging and a big one is lifecycle. Reason Tesla is willing to give a lifetime warranty on the batteries is that A) they can refurb them to new and B) i believe they will innovate and be able to replace current battery packs with ones that last longer(range), charge faster, and live longer.

Plus cost will drop drastically. GenIII can't have the same range as a Model S and cost $15-20k per pack. Car will never reach the "half the price of a Model S" goal.
 

Citizen-T

Active Member
Aug 25, 2011
2,443
104
Raleigh, NC
So, I need to read this in much more detail (and the links) but one thing that comes to mind is that Tesla has said they will sell you an option to replace your pack in 8 years for $12k. Granted, they haven't actually sold anyone this option yet; but, if your estimate that today's packs cost $14k is correct, then THAT IS A RIP OFF.

Now, I don't suppose Tesla is actually ripping off its customers. I suspect that there is a reason they have not yet begun selling these replacement pack options. I suspect it has something to do with battery swapping, so you are probably getting a lot more for that $12k than just a pack in 8 years.
 

sleepyhead

Active Member
May 31, 2013
1,896
10
Texas
Great job CO. The only question I have is about Elon's comments:

A few months ago Elon mentioned that he thinks battery prices will fall below $200 per KWh in about 3-4 years. Just recently he said that prices will fall below $100 within 10 years. Why would he make such comments if the pricing is already there (almost there for the latter)?
 

brianman

Burrito Founder
Nov 10, 2011
17,534
2,997
I skipped most of it (for now) but...
If you assume Tesla is paying ~$1.50/cell, that gives you a total cost for the cells of $11,952.

If you spend ~$2,000 to integrate it into a finished pack, it gets you right in range of the $14,000 pack cost of the smarter media calculation.
Interesting how close these numbers are to the $10,000 and $12,000 for the battery replacement plan.
 

callmesam

Member
Jan 22, 2013
985
629
Santa Monica
@CO

Great article. Best I've read so far in drilling down on wholesale cost to Tesla to make these batteries.

Couple of points:

1. The 147M batteries should be updated to include updated production slated for >21000. 167M would account for the update.

2. Total batteries used will have to account for the 1/2 mwh available at each Supercharger. I'd love to see a calculation of how many batteries Tesla is going to need just for the initial 100 Supercharger stations. What about when they have 200-300 worldwide in 2014?

3. Under one scenario of a typical swap situation, a new battery pack option might be available at 100kw. Then you might add 20 conventional 100kw packs for each of the 75 service centers for 60kw and 85kw to "swap" for long trips. How many more batteries would that require?

4. Do these changes make any difference in calculations for cost?
 

deonb

Active Member
Mar 4, 2013
4,060
4,215
Redmond, WA
One thing to consider is that at the time when we all thought SuperCharger meant Chargers + Solar Panels, we had a number of: $250'000
Now that we think SuperCharger means Chargers + Solar Panels + 0.5MW Batteries - we have a new number: $300'000.

So could the $50'000 difference be essentially the amount needed to buy 500kWh? (So if these are 85kWh packs, then $8'500 per pack. But they don't need to be packs.)
 

GenIIIBuyer

Member
Apr 9, 2013
193
0
Boston, MA
@CO

2. Total batteries used will have to account for the 1/2 mwh available at each Supercharger. I'd love to see a calculation of how many batteries Tesla is going to need just for the initial 100 Supercharger stations. What about when they have 200-300 worldwide in 2014?

Elon has said that adding Grid Storage to a SuperCharger location adds about 150K in cost. Another clue!


1/2 MwH grid storage. So 500 KwH/ 89kWH = 5.6179 Tesla Model S 85 KwH battery pack equivalents.

$150K/5.62 = $26,700.

Obviously, some of that 150K is construction cost. Let's assume $50K worth:

$100K/5.62 = $17,793
 

techmaven

Active Member
Feb 27, 2013
3,618
9,711
Thanks for the write up. I've argued numbers like these on Seeking Alpha for months now. However, I think your estimate is on the low side. Some thoughts:

It is likely that Panasonic NCR18650A's are at the highest end of the spectrum of the range given in the IEK report. Those numbers are likely for manufacturers buying a the highest bulk levels, some of which may exceed Tesla's purchase volume - high volume laptop manufacturers for instance. Therefore, I'm more comfortable with $200/kWH for Tesla at this point with the NCR18650A.

Tesla did not qualify for the lowest tier pricing at first and Mr. Musk did reference that hitting a particular volume level of batteries really helped gross margins in the middle of Q4 2012. So for cars made in Q4 2012, it is likely that Tesla was paying higher than $200/kWH.

There is a low volume motorcycle battery pack manufacturer (can't find the link anymore) that referenced using the same kind of cells and the pack integration cost for them was 100% of the cells. Tesla obviously would do better than that, but the pack integration costs are likely significant.

Telsa charges us $320/kWH for the upgrade from 60kWH to 85kWH. But many of the pack integration costs are the same for the 60kWH vs. the 85kWH, therefore the actual price of the pack is likely higher than $320/kWH. I'm guessing $350/kWH is closer to the actual price purchasers are charged for the battery pack right now. That means $29,750 for the 85kWH pack. The 60kWH pack would be even higher per kWH because the again, the many fixed costs are the same as the 85kWH pack, so assuming $360/kWH, we are looking at $21,600 for the 60kWH pack.

Since the battery pack is likely the single highest cost item in the base Model S at roughly 37% of the price, the GM would be significantly affected by the pack's markup. Since Tesla is only doing about 5-6% GM on the cars sans ZEV credits, it is not likely that the GM on the pack is 50% or a 100% markup. It is far more likely that the GM on the pack is around 20%. I'm thinking that if the pack's markup was too low, there is no way they could hit 25% GM in Q4 this year. If the pack's markup is much higher, than I doubt the GM is that low. I'm thinking that the markup on the pack is less likely to have big swings as the process is likely already highly automated and the major component pricing is pretty much stable. By Q4 this year, the pack has to be around 25% GM - maybe a bit higher in order to offset finished assembly GM that has more manual labor.

With all of that, I'm thinking that the cost for Tesla to make the 85kWH pack was roughly $24k, with raw cell costs + shipping to Fremont around $19k on average in Q4 2012. I'm thinking that they may have been able to reduce that cost to $22k, and maybe down nearer to $21k later this year with cell costs under $17k.

In order to make production costs low, it is unlikely that Panasonic makes a particularly custom cell for Tesla. Instead, I think they just don't bother to include the plastic wrapping and everything else is stock. Tesla's secret sauce is pack integration and management.

Tesla hasn't used the NCR18650B even though those are in production. In my discussion on Seeking Alpha, MRTTF made the comment that at wholesale, the raw cell pricing between different cell lines is not all that different - which means that the NCR18650B should cost roughly the same as the NCR18650A. Then he slightly contradicts himself about the premium for the latest cell lines when discussing the upcoming 4.0Ah battery. Oh, well. Anyways, it is interesting that Tesla hasn't chosen to to use the B which could boost capacity by 9% for a very small weight gain. Not sure why or when, but I'm betting Tesla is far more interested in a lower $/kWH for a proven dependable cell than getting a higher capacity for a higher price at this point.
 

stoebs

Member
May 12, 2013
110
36
Honolulu, HI
Great in depth analysis.

I believe Tesla actually pays a lot less for cells. The same cells are used for battery packs for Solarcity which we also know is growing a fairly large amount. Economies of scale is everything as you mentioned.

Does anybody have any experience with what Solar City charges a retail customer for a Tesla sourced grid storage battery pack? What's the retail $/kWh for that? That could give an upper limit to the price range, since there is presumably some margin going to Solar City as well as margin for Tesla on the battery.
 

callmesam

Member
Jan 22, 2013
985
629
Santa Monica
Thanks for the write up. I've argued numbers like these on Seeking Alpha for months now. However, I think your estimate is on the low side. Some thoughts:

It is likely that Panasonic NCR18650A's are at the highest end of the spectrum of the range given in the IEK report. Those numbers are likely for manufacturers buying a the highest bulk levels, some of which may exceed Tesla's purchase volume - high volume laptop manufacturers for instance. Therefore, I'm more comfortable with $200/kWH for Tesla at this point with the NCR18650A.

Tesla did not qualify for the lowest tier pricing at first and Mr. Musk did reference that hitting a particular volume level of batteries really helped gross margins in the middle of Q4 2012. So for cars made in Q4 2012, it is likely that Tesla was paying higher than $200/kWH.

There is a low volume motorcycle battery pack manufacturer (can't find the link anymore) that referenced using the same kind of cells and the pack integration cost for them was 100% of the cells. Tesla obviously would do better than that, but the pack integration costs are likely significant.

Telsa charges us $320/kWH for the upgrade from 60kWH to 85kWH. But many of the pack integration costs are the same for the 60kWH vs. the 85kWH, therefore the actual price of the pack is likely higher than $320/kWH. I'm guessing $350/kWH is closer to the actual price purchasers are charged for the battery pack right now. That means $29,750 for the 85kWH pack. The 60kWH pack would be even higher per kWH because the again, the many fixed costs are the same as the 85kWH pack, so assuming $360/kWH, we are looking at $21,600 for the 60kWH pack.

Since the battery pack is likely the single highest cost item in the base Model S at roughly 37% of the price, the GM would be significantly affected by the pack's markup. Since Tesla is only doing about 5-6% GM on the cars sans ZEV credits, it is not likely that the GM on the pack is 50% or a 100% markup. It is far more likely that the GM on the pack is around 20%. I'm thinking that if the pack's markup was too low, there is no way they could hit 25% GM in Q4 this year. If the pack's markup is much higher, than I doubt the GM is that low. I'm thinking that the markup on the pack is less likely to have big swings as the process is likely already highly automated and the major component pricing is pretty much stable. By Q4 this year, the pack has to be around 25% GM - maybe a bit higher in order to offset finished assembly GM that has more manual labor.

With all of that, I'm thinking that the cost for Tesla to make the 85kWH pack was roughly $24k, with raw cell costs + shipping to Fremont around $19k on average in Q4 2012. I'm thinking that they may have been able to reduce that cost to $22k, and maybe down nearer to $21k later this year with cell costs under $17k.

In order to make production costs low, it is unlikely that Panasonic makes a particularly custom cell for Tesla. Instead, I think they just don't bother to include the plastic wrapping and everything else is stock. Tesla's secret sauce is pack integration and management.

Tesla hasn't used the NCR18650B even though those are in production. In my discussion on Seeking Alpha, MRTTF made the comment that at wholesale, the raw cell pricing between different cell lines is not all that different - which means that the NCR18650B should cost roughly the same as the NCR18650A. Then he slightly contradicts himself about the premium for the latest cell lines when discussing the upcoming 4.0Ah battery. Oh, well. Anyways, it is interesting that Tesla hasn't chosen to to use the B which could boost capacity by 9% for a very small weight gain. Not sure why or when, but I'm betting Tesla is far more interested in a lower $/kWH for a proven dependable cell than getting a higher capacity for a higher price at this point.

A couple of thoughts:

1. A motorcycle pack (which has less than 10kwh) is going to have a much higher ratio of cell cost to pack cost.

2. Elon has stated on several occasions that Tesla is using the 18650 FORM but that they have their own custom chemistry that Panasonic and others are making for them. (sometimes referred to as automotive formula)

3. Tesla definitely has secret sauce when it comes to integration and management (especially with temperature management and charge management) but cell chemistry explains why they aren't using the new 4.0Ah YET.
 

deonb

Active Member
Mar 4, 2013
4,060
4,215
Redmond, WA
Elon has said that adding Grid Storage to a SuperCharger location adds about 150K in cost. Another clue!

1/2 MwH grid storage. So 500 KwH/ 89kWH = 5.6179 Tesla Model S 85 KwH battery pack equivalents.

$150K/5.62 = $26,700.

Obviously, some of that 150K is construction cost. Let's assume $50K worth:

$100K/5.62 = $17,793

Reference? At the last SuperCharger announcement he mentioned adding Solar to a SuperCharger location adds $150'000 in cost. I can see part of it being earmarked for storage, but at least $50k of that is for PV.

So we're back to $50K/5.62 = $8896
 

GenIIIBuyer

Member
Apr 9, 2013
193
0
Boston, MA
Reference? At the last SuperCharger announcement he mentioned adding Solar to a SuperCharger location adds $150'000 in cost. I can see part of it being earmarked for storage, but at least $50k of that is for PV.

So we're back to $50K/5.62 = $8896

Believe I heard it on the Supercharger conference call. However, between that call, AllThingsD, and the Shareholder meeting it's all a blur right now. Will dig up the reference this evening.

Believe he stated $150K for initial build of Supercharger. This is your basic Supercharger with no Solar and no grid storage. Solar is another $150K, and then grid storage is another $150K.
 

CapitalistOppressor

Active Member
Jun 18, 2012
1,622
0
It is likely that Panasonic NCR18650A's are at the highest end of the spectrum of the range given in the IEK report. Those numbers are likely for manufacturers buying a the highest bulk levels, some of which may exceed Tesla's purchase volume - high volume laptop manufacturers for instance. Therefore, I'm more comfortable with $200/kWH for Tesla at this point with the NCR18650A.

The IEK report is based on data that is from Q3 of 2012, so its almost a year old. There might be a few manufacturers that exceed Tesla's volume, but that is not going to substantially affect the price.

Telsa charges us $320/kWH for the upgrade from 60kWH to 85kWH. But many of the pack integration costs are the same for the 60kWH vs. the 85kWH, therefore the actual price of the pack is likely higher than $320/kWH. I'm guessing $350/kWH is closer to the actual price purchasers are charged for the battery pack right now. That means $29,750 for the 85kWH pack. The 60kWH pack would be even higher per kWH because the again, the many fixed costs are the same as the 85kWH pack, so assuming $360/kWH, we are looking at $21,600 for the 60kWH pack.

Ok, you'll have to walk me through you're logic. The first sentence correctly lists the price/kWh of the upgrade from 60kWh to 85kWh. The second sentence correctly notes that the per kWh price of the 60kWh must be higher because it's the same pack with fewer batteries. The third sentence asserts a new, higher per kWh pack cost for the 60kWh (which I am not disputing).

But then you appear to go off the rails by projecting that higher per kWh price you derive for the 60kWh pack back up to the 85kWh pack. How does that work, exactly?


In order to make production costs low, it is unlikely that Panasonic makes a particularly custom cell for Tesla. Instead, I think they just don't bother to include the plastic wrapping and everything else is stock. Tesla's secret sauce is pack integration and management.

Look at the battery IP thread. I wrote that thread based only on the patents, and was prepared to accept that Tesla might not be using those designs. But someone posted photos of the batteries that clearly show batteries that are very far from stock, and which match the simplified battery design referenced in Tesla's patent.

These are not stock batteries with the wrapper removed, and such batteries would have a high chance of shorting out, or else require the small plastic gasket that the patent on wrapper removal clearly stated was required. That gasket is also not visible in the photos, and instead is replaced with the simplified cap design, which allows the batteries to be mounted in the pack without any wrapper, and without exploding.

Furthermore, those changes almost certainly reduce production costs for Panasonic, because a large number of complex components are simply deleted. Your statement to the contrary is akin to stating that GM couldn't deliver an engine block for less money than they could deliver a finished, working engine.

Your statement might make more sense if Tesla was adding complex new components, but they are not. They are just deleting them. It also might make some sense if Tesla wanted to build just a few dozen of these. But Tesla just needs a little spur off of the production line to put the simple cap on (as opposed to building the far more complex cap on the stock batteries), and they have the volumes to support it.

Given the patents, photos and repeated statement's by everyone involved (from Tesla to Panasonic) that the cells that Tesla uses are not stock, I think any statement that they are is demonstrably wrong.

- - - Updated - - -

I should add, that I won't dispute that my estimate might be a low ball estimate. I went with it because it fits many lines of evidence, and because I hoped it would stimulate debate. The safer assumption is that Tesla is building a completed pack for $200/kWh. I think the evidence is more than strong enough that anyone who wants to claim a per-kWh cost of more than that is going to have a tough time.
 

Blurry_Eyed

MS Sig #267, MX Sig # 761
Dec 29, 2011
588
307
So, I need to read this in much more detail (and the links) but one thing that comes to mind is that Tesla has said they will sell you an option to replace your pack in 8 years for $12k. Granted, they haven't actually sold anyone this option yet; but, if your estimate that today's packs cost $14k is correct, then THAT IS A RIP OFF.

Now, I don't suppose Tesla is actually ripping off its customers. I suspect that there is a reason they have not yet begun selling these replacement pack options. I suspect it has something to do with battery swapping, so you are probably getting a lot more for that $12k than just a pack in 8 years.


+1 - I also think the delay in allowing us to buy the battery replacement pack option is also related to the battery swap issue. Maybe you pay $12k to get a battery replacement and to have access to the battery swap system that may be located at every service center (My speculation). That way you don't have to worry about the health of the particular battery you swap out, you can just go back at any time and exchange your battery for one that is 'healthy'.
 

CapitalistOppressor

Active Member
Jun 18, 2012
1,622
0
Just to add a point which may have gotten lost in my original post. Every one of these companies is advertising these batteries at $1 each. I had to dig through the website to find addtional advertisements that cost $2, and at least one of these clearly stated that it was "cheap new 2012" pricing.

I conciously excluded ALL of these ads because they imply an $89/kWh cost. The only bounding methodology that supported that was my own "scientific" methodology which projected maufacturing costs forward from the 1999-2000 timeframe to 2013, and came up with a rough manufacturing cost of $0.85/cell.

But I cut all of that right out of consideration because $1 cells is just crazy talk.
 

GenIIIBuyer

Member
Apr 9, 2013
193
0
Boston, MA
Reference? At the last SuperCharger announcement he mentioned adding Solar to a SuperCharger location adds $150'000 in cost. I can see part of it being earmarked for storage, but at least $50k of that is for PV.

So we're back to $50K/5.62 = $8896

Yea, I was wrong about the $150K for grid storage reference. All Elon said was $150K for supercharger, and additional $150K for solar supercharger. I guess the solar supercharger is implied to have grid storage.

$150K for panels and 1/2 MwH battery pack seems to good to be true though, maybe SolarCity is cutting Tesla a really good deal.
 

deonb

Active Member
Mar 4, 2013
4,060
4,215
Redmond, WA
Yea, I was wrong about the $150K for grid storage reference. All Elon said was $150K for supercharger, and additional $150K for solar supercharger. I guess the solar supercharger is implied to have grid storage.

$150K for panels and 1/2 MwH battery pack seems to good to be true though, maybe SolarCity is cutting Tesla a really good deal.

Place an order for 40'000 solar panels from them, and I'm sure they'll cut you the same deal :).
 

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