Model S Battery Pack - Cost Per kWh Estimate

[lolachampcar]

and the part that stands out for me is that Tesla has to solve a bunch of other more pedestrian ramp issues like funding the ramp in general production and receivables. With luck, they can do the receivables with credit lines but the up front for all the non-battery related manufacturing ramp will likely be equity money as well.

 

[CapitalistOppressor]

Do we know the production volume of the Panasonic plant in China that they just built in 2012 for around $100 million? Just wondering if it fits with the pricing model.

Not sure, but I've started to suspect that a lot of the numbers we see are just the kind of thing we hear in shareholder letters that might only be discussing the amounts made in a calendar year, or only covering the cost of equipment or other classes of spending that doesn't equate to a bottom line cost to build a facility from start to finish.

Panasonic had costs associated with their big 18650 plant, but they were also discussing various "phases" of completion, making it clear the plant was only operating at a fraction of its potential. It's not clear to me in retrospect how that investment related to actual capacity. We also don't know what government incentives might have defrayed costs, or many other variables.

In contrast, the study from the American Manufacturing Association is straight forward, and intended to encourage American companies to build these plants, rather than attempting to avoid scaring investors. They clearly intended it to be a comprehensive accounting of costs, and they are a very credible source.

 

[DonPedro]

I'd love to know what they are planning wrt this. Given the lead times, they have to think far ahead. I'm sort of thinking that they could maybe get a PE fund to join them in creating a plant. They would then be researching gov't incentives, labor costs and tax implications right now. Not sure how the market will react if they announce something here - most people not aware of the scale of the issue.

 

[CapitalistOppressor]

I'd love to know what they are planning wrt this. Given the lead times, they have to think far ahead. I'm sort of thinking that they could maybe get a PE fund to join them in creating a plant. They would then be researching gov't incentives, labor costs and tax implications right now. Not sure how the market will react if they announce something here - most people not aware of the scale of the issue.

One path that I've started looking at in the past few days is the possibility that Tesla might take out a mega-loan from the ATVM loan program. There is $16 billion available, and its the same program that Nissan used to build Smyrna, and which Ford used to develop their plugins.

It's also the same program that gave Tesla their original loan, and Tesla obviously felt that loan was damaging to their public relations. So it's not obvious to me that Tesla would want to jump back in bed with the Fed's.

However, I think that their public image is much stronger now and wouldn't be affected any more than Ford's was when they took out their $5.9b loan, or Nissan with their $1.4b loan. I think Tesla is considered to be "legit" now, and they already have a history of paying off a loan from this program. The public understands credit history, and I don't think it would be as easy now to equate Tesla with Solyndra like failure, or GM style bail-out.

Still, it's an arguable case either way, but the fact is that the program potentially offers resources on the scale that they need, on what will likely be attractive terms, and would IMHO be approved if they make the request.

I'm not as sure about the alternatives. I don't think bank financing on this scale will be available by 2015 (which is when they probably need to have a plan and financing in place). And I suspect that any secondary on the scale needed would result in unfavorable terms. They could sell more bonds, but then the question comes back to what the terms are and whether they can sell enough to satisfy their needs.

Anyways, I'm certain Tesla is looking at the non-governmental sources, and they might have hope that the battery industry will pony up the necessary investment (I don't personally, but I suppose it's possible). But the ATVM is a readily available source of funding that could go a long way towards solving this problem, and do so on potentially favorable terms for Tesla.

 

[sleepyhead]

One path that I've started looking at in the past few days is the possibility that Tesla might take out a mega-loan from the ATVM loan program. There is $16 billion available, and its the same program that Nissan used to build Smyrna, and which Ford used to develop their plugins.

It's also the same program that gave Tesla their original loan, and Tesla obviously felt that loan was damaging to their public relations. So it's not obvious to me that Tesla would want to jump back in bed with the Fed's.

However, I think that their public image is much stronger now and wouldn't be affected any more than Ford's was when they took out their $5.9b loan, or Nissan with their $1.4b loan. I think Tesla is considered to be "legit" now, and they already have a history of paying off a loan from this program. The public understands credit history, and I don't think it would be as easy now to equate Tesla with Solyndra like failure, or GM style bail-out.

Still, it's an arguable case either way, but the fact is that the program potentially offers resources on the scale that they need, on what will likely be attractive terms, and would IMHO be approved if they make the request.

I'm not as sure about the alternatives. I don't think bank financing on this scale will be available by 2015 (which is when they probably need to have a plan and financing in place). And I suspect that any secondary on the scale needed would result in unfavorable terms. They could sell more bonds, but then the question comes back to what the terms are and whether they can sell enough to satisfy their needs.

Anyways, I'm certain Tesla is looking at the non-governmental sources, and they might have hope that the battery industry will pony up the necessary investment (I don't personally, but I suppose it's possible). But the ATVM is a readily available source of funding that could go a long way towards solving this problem, and do so on potentially favorable terms for Tesla.

I agree with you. The stock may (or may not) take a short-term hit, but this is definitely going to build long-term shareholder value.

If they can get a couple billion from it to build a battery plant, I think that it would be a great benefit to TSLA shareholders.

I vote yes!

 

[ModelS8794]

One path that I've started looking at in the past few days is the possibility that Tesla might take out a mega-loan from the ATVM loan program. There is $16 billion available, and its the same program that Nissan used to build Smyrna, and which Ford used to develop their plugins.

It's also the same program that gave Tesla their original loan, and Tesla obviously felt that loan was damaging to their public relations. So it's not obvious to me that Tesla would want to jump back in bed with the Fed's.

However, I think that their public image is much stronger now and wouldn't be affected any more than Ford's was when they took out their $5.9b loan, or Nissan with their $1.4b loan. I think Tesla is considered to be "legit" now, and they already have a history of paying off a loan from this program. The public understands credit history, and I don't think it would be as easy now to equate Tesla with Solyndra like failure, or GM style bail-out.

Still, it's an arguable case either way, but the fact is that the program potentially offers resources on the scale that they need, on what will likely be attractive terms, and would IMHO be approved if they make the request.

I'm not as sure about the alternatives. I don't think bank financing on this scale will be available by 2015 (which is when they probably need to have a plan and financing in place). And I suspect that any secondary on the scale needed would result in unfavorable terms. They could sell more bonds, but then the question comes back to what the terms are and whether they can sell enough to satisfy their needs.

Anyways, I'm certain Tesla is looking at the non-governmental sources, and they might have hope that the battery industry will pony up the necessary investment (I don't personally, but I suppose it's possible). But the ATVM is a readily available source of funding that could go a long way towards solving this problem, and do so on potentially favorable terms for Tesla.

I think this is right in Panasonic and Samsung's wheelhouse, and see a JV much more likely than a Tesla/ATVM financed operation. Dow Corning or Samsung/Corning offer the model I envision here. I would not like to see what would happen to the stock if we find Tesla does indeed need to pony up multiple billion in low ROIC CapX to build battery manufacturing facilities.

edit: though on second thought, the degree to which Tesla seems happy to vertically integrate/insource probably means they'd be up for the challenge of doing it. There's gotta be useful IP on Panasonic's end though, so a JV makes sense even if it still means Tesla needs large investment $$ to make this a reality.

 

[lolachampcar]

Tesla will need-

$4/cell-year * 4000 Cell/G3 * 500,000 G3 or $8B

A large amount of capital to handle all the other manufacturing ramp issues that come with 1/2M/year G3

Receivables funding for six inventory turns a year of 1/2M cars at $25K each or $2.1B in a revolver

The business side is going to be busy and it will be hard to hide this type of activity.

 

[CapitalistOppressor]

Tesla will need-

$4/cell-year * 4000 Cell/G3 * 500,000 G3 or $8B

A large amount of capital to handle all the other manufacturing ramp issues that come with 1/2M/year G3

Receivables funding for six inventory turns a year of 1/2M cars at $25K each or $2.1B in a revolver

The business side is going to be busy and it will be hard to hide this type of activity.

I nominate this for understatement of the quarter, lol.

But that's just the thing when you get down to it. The accumulated capital and resources of a typical automaker is just staggering. And once you start talking about hundreds of thousands of cars per year, Tesla's needs start edging up into the same territory.

We're all quivering in our boots over the potential multi-billion dollar cost of new battery factories, but the fact is that even a smallish manufacturer like Chrysler requires a massive stock of capital in order to operate, and all of that equipment didn't just magic itself into existence. Tesla just needs to pick a path, and pull the trigger.

If Tesla is able to get annual sales of 100k of the S platform and 500k of GenIII, $8b in debt will be small potatoes, and they'll be a prime position to finance the next round of expansion.

 

[DonPedro]

All of this says they are going to be production constrained for all looong time. If you think about it - they have to make sure they don't overinvest too much. With demand notoriously hard to predict and with scaling up being challenging in any case, they should certainly try to undershoot by a bit. Good for the brand, too (scarcity is always attractive).

 

[CapitalistOppressor]

All of this says they are going to be production constrained for all looong time. If you think about it - they have to make sure they don't overinvest too much. With demand notoriously hard to predict and with scaling up being challenging in any case, they should certainly try to undershoot by a bit. Good for the brand, too (scarcity is always attractive).

Yes. There just might not be an achievable solution that gets them beyond 200k units for GenIII, and they'll be forced to scale slowly to 500k. In fairness, the BMW 3 + 5 Series only sells ~200k units/yr in North America.

Because of the much lower cost of ownership, general Tesla hype, and incentives (California at a minimum will be continuing their $2,500 tax credit) I expect Tesla to do much better than that.

So an initial capability of 200k units (not including S platform) might well limit them to North America for a year or two as they demonstrate the demand necessary to justify the additional battery factory investments. And even then they might have trouble satisfying demand.

But at this point, even 200k units probably involves $3-$4 billion in unanticipated capital expenditures to build battery production facilities. Then they need to generate a similar amount every 18-24 months to continue ramping up production lines until they are meeting global demand..

It sucks to leave global demand on the table for that long, but you gotta do what you gotta do.

 

[brianstorms]

Because of the much lower cost of ownership, general Tesla hype, and incentives (California at a minimum will be continuing their $2,500 tax credit) I expect Tesla to do much better than that.

Pretty sure it's actually a cash rebate, not a tax credit. Just applied for one last week. I'm expecting a check. Feds, yes, a credit, but CA, cash, I believe.

 

[ItsNotAboutTheMoney]

Yes. There just might not be an achievable solution that gets them beyond 200k units for GenIII, and they'll be forced to scale slowly to 500k. In fairness, the BMW 3 + 5 Series only sells ~200k units/yr in North America.

Because of the much lower cost of ownership, general Tesla hype, and incentives (California at a minimum will be continuing their $2,500 tax credit) I expect Tesla to do much better than that.

So an initial capability of 200k units (not including S platform) might well limit them to North America for a year or two as they demonstrate the demand necessary to justify the additional battery factory investments. And even then they might have trouble satisfying demand.

But at this point, even 200k units probably involves $3-$4 billion in unanticipated capital expenditures to build battery production facilities. Then they need to generate a similar amount every 18-24 months to continue ramping up production lines until they are meeting global demand..

It sucks to leave global demand on the table for that long, but you gotta do what you gotta do.

So, let's try some political math: $2/gal import, 12,000 mi/yr, 30mpg => 400gal/yr =>$800/yr import/u, 200k/yr => $160M/yr/yr import reduction. I think the US political mathematicians will jump at it so I don't think capital will be a problem, at least on the US side. My big concern is on the Japanese side, if the political wind protects Toyota's interests.

Based on reports related to Suminoe that I've read, there was expected to be $1.3B (in Yen, at a time of strong Yen) in additional investment to boost production to over 300M/yr, but that may have been from a base of 120M/yr, in which case that's only 180M extra cell/year (36k cars?). Maybe $5B investment needed per 200k cars?

If Tesla convinces Panasonic that the Model E (and eventually the compact SUV Model Y ) is go, I could see government assistance helping to get the cell manufacturing up and running (CA energy too expensive to use Tesla's extra land?) and that would support an aggressive expansion schedule.

 

[JRP3]

Something else to consider, when there is another fundamental chemistry change which gives a significant jump in capacity the actual number of cells needed per kwh will drop.

 

[lolachampcar]

If I were in Tesla's shoes, there is only the chemistry we are using today and the foreseeable evolution of the that chemistry. Anything else adds to much to the "To Do" list.

Musk's $35K G3 price point without Federal support may very well generate 1/2M G3 demand within 18 months. This assumes that S and X have played out well without any fires or major recalls. As silly as I think the words are coming out of my mouth, I think the demand will actually be there.

Exclusivity works very well for Ferraris, S and X but production constrained for extended periods of time on a G3 product may actually do damage. I'm sure Musk and team are well aware of this (I'm still trying to figure out how they have matched awareness/demand for S against capacity so well) and have thought through how they can control demand.

As for the political will kicking in, I'm afraid I do not give gov that much credit. It seems what makes policy is not remotely related to common sense and supporting the growth of a technology that makes the US a world leader and helps us solve pollution problems all over the world makes way too much sense.

 

[CapitalistOppressor]

Pretty sure it's actually a cash rebate, not a tax credit. Just applied for one last week. I'm expecting a check. Feds, yes, a credit, but CA, cash, I believe.

Yes, I think you are correct. I assumed it was just another fully refundable tax credit, but the literature describes it as a cash rebate.

 

[marvinat0rz]

All of this says they are going to be production constrained for all looong time. If you think about it - they have to make sure they don't overinvest too much. With demand notoriously hard to predict and with scaling up being challenging in any case, they should certainly try to undershoot by a bit. Good for the brand, too (scarcity is always attractive).

A plus of being production constrained is that you can take higher prices for your products. You won't be able to sell to everyone anyway, so why not sell to those who are willing to pay the most? Obviously it would be better to be demand constrained, but this effect will at least ensure that Tesla will keep a high margin during the long production ramp-up.

 

[CapitalistOppressor]

So, let's try some political math: $2/gal import, 12,000 mi/yr, 30mpg => 400gal/yr =>$800/yr import/u, 200k/yr => $160M/yr/yr import reduction. I think the US political mathematicians will jump at it so I don't think capital will be a problem, at least on the US side. My big concern is on the Japanese side, if the political wind protects Toyota's interests.

Based on reports related to Suminoe that I've read, there was expected to be $1.3B (in Yen, at a time of strong Yen) in additional investment to boost production to over 300M/yr, but that may have been from a base of 120M/yr, in which case that's only 180M extra cell/year (36k cars?). Maybe $5B investment needed per 200k cars?

If Tesla convinces Panasonic that the Model E (and eventually the compact SUV Model Y ) is go, I could see government assistance helping to get the cell manufacturing up and running (CA energy too expensive to use Tesla's extra land?) and that would support an aggressive expansion schedule.

Here is a link about the cancellation of plans to ramp the Suminoe plant up to its full phase 1 capacity of 300m cells/year -

Panasonic drops Japan battery plant expansion

The total planned investment for phase 1 was $1.3 billion, which works out to ~$4.33/cell. This is obviously right in line with the study I linked pointing to a rough cost of $4/cell to build a battery plant.

Suminoe was built with the possibility of a massive future expansion in a hypothetical phase 2 that I believe would have allowed it to double capacity, and it would be my guess that the extra $0.33/cell we see is a result of Panasonic building facilities capable of that future expansion.

However, those plans were shelved in 2011, and total investment was capped at ~$780m, which should mean that production capacity is closer to 180-200m cells/year right now.

The company had initially planned to invest 100 billion yen ($1.3 billion) in the Suminoe plant in two tranches, but the Nikkei newspaper said the cancellation of the second tranche would leave total investment at 60 billion yen.

We also know that Panasonic wasn't fully utilizing their available capacity, but thanks to Tesla now have plans to re-open the lines at the plant that they had shut down.

Regardless, Suminoe clearly illustrates the costs required to build plants on the scale that Tesla needs. Even a full blown 600m cell/year second phase Suminoe would not be enough to build the 800m cells you need for 200k GenIII cars. But its the right ballpark of the kind of plants that Tesla needs moving forward.

 

[ncc1701]

How does Tesla do it? I have read from wikipedia and other source that Tesla does their own Li-ion battery packs, thus this would save them money, whereas most EV converters and major EV manufacturers go to ready-made Li-ion packs that cost a few hundred $$ each. So here is the overview I came up with, how Tesla is doing it. I don't know the exact voltage and AmpHour ratings of the batteries Tesla uses, nor do I know the exact voltage of their electric motor(s), so I will choose one below, that seems workable.

Tesla uses Panasonic 18650 Lithium-Ion
Example Source: http://www.alibaba.com/product-gs/1308114765/Panasonic_18650_3400mah_lithium_ion_battery.html
$1 per battery
Rated at 3.6 Volts x 3.4 Ah (Ampere Hours) = 12.24 Wh (Watt Hours)

288 volt motor selected for appropriate horsepower, and powered by 85kWh battery system (like Tesla's 85kWh model)
Therefore 85000Wh / 288V = 295Ah (amp hours) rating.

Further, 295Ah / 3.4Ah per battery cell = 86 battery cells to make up a battery "pack" rated at 3.6V and 295Ah.

Further still, to get 288Volts you then need 288V / 3.6V per pack = 80 packs.

Finally 86 battery cells per pack, times 80 packs = 6880 battery cells.

At $1 per battery cell from a good supplier, that is a grand total of $6880 dollars to power the electric motor, and you then need to package
86 battery cells per "pack" (in parallel circuit to get 295Ah per pack) into 80 "packs" (hooked up in series circuit to get 288V).


Now 6,880 battery cells is not exactly the Tesla 7,000 to 7,104 battery cells I've read about, but it is very close, and
describes how I think they are doing it.

Said another way, an EV converter who is able to create his own packs of 86 battery cells per pack, and do 80 total packs, will have
a battery system much like the Tesla battery system, and cost $6,880. Of course you have to make or obtain rectangular
housings for the 86 battery cells per pack, so if you can do that part for one or two thousand dollars, you have a Tesla-like battery system
for under $10k. If you buy ready-made packs for a few hundred each, you would easily get to $20k+.

Then, if you simply do the above steps to create a Nissan Leaf-like battery system at 24kWh, the total cost of batteries comes down
to around $2000. Add some cost to create or buy for cheap the pack housings, and you still don't go above say $4000.

 

[vfx]

Deepest apologies if this was mention upthread.

Elon places battery materials cost at $80 per kWh
http://archive.org/details/KevinRoseInterviewsElonMusk
Start about 24:30

 

[CapitalistOppressor]

Deepest apologies if this was mention upthread.

Elon places battery materials cost at $80 per kWh
http://archive.org/details/KevinRoseInterviewsElonMusk
Start about 24:30

No need to apologize, thanks for the link..

I linked an Elon comment that pegged the materials cost at ~$80kWh, but it was a written source that was taken from comments Elon made in another forum. I also posted other research backing up what Elon said. But I hadn't ever heard him mention it in person, and the interview was neat..