Model S Battery Pack - Cost Per kWh Estimate

[callmesam]

Hi there,


1. Still, I think that it remains to be seen if Tesla is able to make money at all. These numbers regarding battery cost are way to optimistic in my opinion.

2. Some numbers: Based on Tesla's 3rd quarter report the cost to build and manufacturer (that is including every cost except R&D and sales) one Model S is at app. 95.000$ with an average selling price of app. 112.000$ worldwide.

3. If Tesla wants to maintain their current strategy of selling cars directly to customer, they will have substantially higher sales cost over time. If you include R&D and sales, Tesla is still not making any money at present. Yet they will have to expand their point of sales massively to get anywhere close to the volumes they want to achieve. In Germany they have 3 shops at present. I say shops not dealerships because they are really tiny. The one in Munich has not more than 2 sales people.

4. Back to costs. I believe that even the hand-made Porsche Panamera is a lot cheaper to produce than the Tesla Model S. Porsche is making money on every car sold including the base model Boxster, starting at 50.000$ at the dealer. The Porsche Panamera is much more expensive, yet production costs are only slighly higher. Even a full sized Turbo S will not be more than app. 60.000$.

5. In 2012 during an Investor presentation Tesla gave a very short insight into the Model S' battery cost. They said, they expected it to be around 400$/kwh. That is including material, manufacturing and all cooling requirements related to the battery. If I take a look at the Q3 I believe this number is a lot more valid than the fantastic sub 200$ calculations.

6. Car manufacturing is a very complex, difficult process. Such a big battery has a very rich demand profile. It has to bee cooled, heated, it has to absorb shocks, accidents, standing water etc.......yet it also has to cope with incredble power and charging requirements. Under full load this battery will be empty within minutes. That's just the most demanding environment for a battery system you can think of.

Let's take each of your arguments and dismantle them:

1. Optimism: Hopefulness and confidence about the future or the successful outcome of something. Every fact has been sourced. If you have other sources, please provide.
2. 2012 Q3 is probably not the best source of an optimized manufacturing facility in Q1 of 2013. Tesla has ramped production, reduced labor costs by more than 40% and is no longer having supplier problems.
3. Gibberish. Tesla's costs for each sale are drastically lower than Ford (which spends >$3B on advertising)
4. See #2 above
5. Sandbagging. See #1
6. FUD. Tesla's batteries in the Roadster have performed well, no PACK failures and excellent durability and sustain of charge.

 

[CapitalistOppressor]

Some numbers: Based on Tesla's 3rd quarter report the cost to build and manufacturer (that is including every cost except R&D and sales) one Model S is at app. 95.000$ with an average selling price of app. 112.000$ worldwide.

Back to costs. I believe that even the hand-made Porsche Panamera is a lot cheaper to produce than the Tesla Model S. Porsche is making money on every car sold including the base model Boxster, starting at 50.000$ at the dealer. The Porsche Panamera is much more expensive, yet production costs are only slighly higher. Even a full sized Turbo S will not be more than app. 60.000$.

Welcome to TMC

That said, all of these costs related to the ramp up have been extensively discussed elsewhere. The fact that the factory workers and delivery folks were averaging over 80 hours per week (including 30 hours of overtime and 10 hours of double time) in Q4, along with extensively documented supplier issues had a lot more to do with the cost of sales numbers. And the fact that those issues didn't really start to get cleared up until February had a lot to do with Q1 numbers, which showed massive improvement, but a failure to get fully over the hump.

In 2012 during an Investor presentation Tesla gave a very short insight into the Model S' battery cost. They said, they expected it to be around 400$/kwh. That is including material, manufacturing and all cooling requirements related to the battery. If I take a look at the Q3 I believe this number is a lot more valid than the fantastic sub 200$ calculations.

The $400/kWh price you think they quoted lacks context and is not properly sourced. I've provided a large number of links showing that lots of folks associated with Tesla have been saying for years they expect Tesla to deliver their battery for under $200/kWh. Including Martin Eberhard, who has claimed that despite having an axe to grind after being forced out of the company.

In addition, I've provided links to studies by academic and industry groups clearly demonstrating that costs for these batteries in 2009 was $200-$250/kWh while costs in Q3 of 2012 were between $120-$200. That is completely aside from the admittedly sketchy data that I've gathered from the wholesalers.

I am a data driven person, and try hard not to fall prey to fanboi syndrome. If you have data that contradicts this, feel free to present it. An unsourced anecdote from an investors conference doesn't qualify in my book.

 

[Realist]

Of course my data was related to Q1 2013 numbers, not 3rd 2012. I did make a mistake there, sorry for that. So the 95.000$ number for each Model S is based in the latest results.

The 400$/kwh source is directly from Tesla. Take a look at this presentation: http://ir.teslamotors.com/common/download/download.cfm?companyid=ABEA-4CW8X0&fileid=562858&filekey=6fd411d9-c47d-4d29-9489-09ba283bf07b&filename=Tesla%20Presentation%20-%20Spring%202012.pdf

There is no exakt data provided, but still it clearly indicates a price above 350. I think a lot of people underestimate the manufacturing costs of such a battery pack INCLUDING the whole cooling and safety equipment.

The model s battery pack is also a completely different animal to the Roadster. For example, vampire load was never a real issue on the roadster. Just take a look at the consumption numbers of both cars and you get the idea.

 

[Citizen-T]

Still, I think that it remains to be seen if Tesla is able to make money at all. These numbers regarding battery cost are way to optimistic in my opinion.

First, welcome to TMC.

Second, I appreciate your doubts, but as others have said...we need data. Your analysis of the Q1 numbers is far too simplistic. The high costs can be explained by well documented temporary costs. It is impossible to extract the cost of the battery from that one data point.

I think you'll find that while these numbers may not be correct, "optimism" certainly isn't at fault. A tremendous amount of work went into gathering the data used to draw this conclusion. At least take the time to do an independent analysis of the same data before dismissing it.

Better yet, gather some new data to contribute to the conversation. We here, especially in the investor community are much more interested in the truth than we are in optimism. If you have better data that tells a different story then we would love to see it.

Sent from my Nexus 7 using Tapatalk HD

 

[Realist]

Of course I meant the Q1 2013 results. Sorry for that.

In it's recent quarter Tesla made 4900 cars. That is not ramp up stage anymore. As I said the 95.000$ number is without sales and R&D costs. Tesla might be able to lower their production coss in the future. But right now the cost for a Model S is double the industry Standard for a comparable combustion engined car.

I have read through the various sources of this thread and I can't find any reliable source on the manufacturing costs of the battery pack. These are just assumptions on cell Prices and very simple suggestions on the manufacturing based on some IP patents.

Without knowledge of the cell's chemistry and therefore the requirements on thermal management any calculation "out of the box" are pure speculation. Just remember that the demands on the battery profile are pretty extreme and much more demanding than in any other application inc. the Tesla Roadster, which had to cope with app. half the energy consumption.

Got to the Investor section of Tesla Motos and the presentation of April 2012. They clearly indicate a current price für the whole battery pack above 350$/kwh. That is of course extremely cheap by any standard. Yet it does fit to the current 95.000$ production sticker for a Model S.

 

[WarpedOne]

The model S 85kWh battery pack has 7104 cells. S96P74. The roadster comes with S99P69

This doesn't add up.
MS85 is supposedly using 3100mAh cells at 3,7V nominal voltage. One cell thus holds 11,47 Wh and 7104 of them only hold 81,482 Wh.
85kWh in 7104 cells means 11,965 Wh per cell. At 3,6 V nominal these would need to be 3300 mAh or 3230 mAh at 3,7V.
Thee must be more than 7104 cells.

 

[JRP3]

Without knowledge of the cell's chemistry and therefore the requirements on thermal management any calculation "out of the box" are pure speculation. Just remember that the demands on the battery profile are pretty extreme and much more demanding than in any other application inc. the Tesla Roadster, which had to cope with app. half the energy consumption.

We know the battery chemistry, LiCoNiAl, we know that compared to other applications the cells are shallow cycled most of the time, which is actually easier on the cell, and since they are paralleled the load on any individual cell is small, and any higher load would only be for a few seconds. They are also temperature controlled, unlike most other applications.

Additionally, why would you use data from the April 2012 presentation, over a year old, as representative of today's production costs?

 

[deonb]

We know the battery chemistry, LiCoNiAl, we know that compared to other applications the cells are shallow cycled most of the time, which is actually easier on the cell, and since they are paralleled the load on any individual cell is small, and any higher load would only be for a few seconds. They are also temperature controlled, unlike most other applications.

Additionally, why would you use data from the April 2012 presentation, over a year old, as representative of today's production costs?

It's LiNiCoAlO2 actually. From:
http://ev.sae.org/article/11923

 

[JRP3]

Close enough :wink:

 

[Soflason]

@CapOp - great to see your work in Green Car Reports published:
What Goes Into A Tesla Model S Battery--And What It May Cost

Nice to read the more in-depth, long form version here on TMC first though

Hopefully this gets picked up by other media sources in order to further dispute the assumptions made by Barron's this weekend, well done.

 

[ShortSlaver]

What Goes Into A Tesla Model S Battery--And What It May Cost

This is excellent, great article. Easily the most informed and thoughtful out there recently.

 

[Realist]

What Goes Into A Tesla Model S Battery--And What It May Cost

You say:

"In contrast to every other automaker, which use specialized large format Li-Ion cells, Tesla's battery pack is made up of thousands of inexpensive commodity cells similar to those found in Laptops."


Straubel:

"We’ve totally custom-engineered that cell working jointly with Panasonic to create. It’s an automotive cell, tested to automotive standards. It doesn’t go into laptops anywhere."

 

[Citizen-T]

You say:

"In contrast to every other automaker, which use specialized large format Li-Ion cells, Tesla's battery pack is made up of thousands of inexpensive commodity cells similar to those found in Laptops."


Straubel:

"We’ve totally custom-engineered that cell working jointly with Panasonic to create. It’s an automotive cell, tested to automotive standards. It doesn’t go into laptops anywhere."

His statement is accurate. Tesla uses the same form factor as laptops in order to leverage the enormous economies of scale that have been built up for that industry. The chemistry has been modified to suite electric vehicles and slight modifications have been made, mostly around removing safety mechanisms, but CapOp documents all of that in the article.

The two statements you quoted do not conflict with one another.

 

[brianman]

You say:

"In contrast to every other automaker, which use specialized large format Li-Ion cells, Tesla's battery pack is made up of thousands of inexpensive commodity cells similar to those found in Laptops."


Straubel:

"We’ve totally custom-engineered that cell working jointly with Panasonic to create. It’s an automotive cell, tested to automotive standards. It doesn’t go into laptops anywhere."

Note the underlined word in the first quote and the implied "identical" in the second quote. Being "similar yet not identical" is not inconsistent.

 

[CapitalistOppressor]

Of course I meant the Q1 2013 results. Sorry for that.

In it's recent quarter Tesla made 4900 cars. That is not ramp up stage anymore. As I said the 95.000$ number is without sales and R&D costs. Tesla might be able to lower their production coss in the future. But right now the cost for a Model S is double the industry Standard for a comparable combustion engined car.

I have read through the various sources of this thread and I can't find any reliable source on the manufacturing costs of the battery pack. These are just assumptions on cell Prices and very simple suggestions on the manufacturing based on some IP patents.

Without knowledge of the cell's chemistry and therefore the requirements on thermal management any calculation "out of the box" are pure speculation. Just remember that the demands on the battery profile are pretty extreme and much more demanding than in any other application inc. the Tesla Roadster, which had to cope with app. half the energy consumption.

Got to the Investor section of Tesla Motos and the presentation of April 2012. They clearly indicate a current price für the whole battery pack above 350$/kwh. That is of course extremely cheap by any standard. Yet it does fit to the current 95.000$ production sticker for a Model S.

Since you didn't provide a link to the April 2012 investor presentation, I will -

http://files.shareholder.com/downloads/ABEA-4CW8X0/1911629400x0x562858/6fd411d9-c47d-4d29-9489-09ba283bf07b/Tesla%20Presentation%20-%20Spring%202012.pdf

On page 20 you will see a graph, clearly referring to competitors, showing a projected cost per kWh of $345 in 2020. If you read the references you will see that is based on this -

"Cost Survey: Roland Berger Study LiB Value Chain and Cost Model (March 2011)"

In the graph, the Model S costs are not included. Just a graphic pointing to this reference -

"Tesla Model S – Projected cost not disclosed. Includes all cells, electronics, packaging and labor costs"

You just misunderstood this graph. Tesla made no claim whatsoever about their costs except for the headline "Electric
Powertrain - Leadership on Range & Cost"

In contrast, we have academic studies showing 2009 costs at $200-$250/kWh and industry studies showing costs at $120-$200/kWh in Q3 of 2012, and current advertisements from Chinese wholesalers showing these costs to be in the range of the 2012 data or lower.

How are these not "reliable" sources? Your investor presentation doesn't say what you think it says. You should probably rethink what you consider a "reliable" source.

- - - Updated - - -

You say:

"In contrast to every other automaker, which use specialized large format Li-Ion cells, Tesla's battery pack is made up of thousands of inexpensive commodity cells similar to those found in Laptops."


Straubel:

"We’ve totally custom-engineered that cell working jointly with Panasonic to create. It’s an automotive cell, tested to automotive standards. It doesn’t go into laptops anywhere."

Yes, if you read the IP thread I've been working on you can see that these cells would basically explode outside of the Tesla pack. Tesla's patents on them are impressive with how simple they are. That said, they are still 18650 cells, and if you plugged them into a laptop in place of the conventional ones, they would work fine right up until they exploded

Also, FYI, the editing process changed my story somewhat. As an example, when discussing the number of batteries I purchased "relatively small number" got turned into "small number". Editors love to hack and slash nuance right out of an article, and John added a paragraph here and there to make points he thought were important.

So if it turns out there are any serious errors, I at least have plausible deniability, lol. In this case though, similar was in the original, and it is accurate.

 

[lolachampcar]

Realist,

Let me take a more German approach to your joining the conversation.

You have been asked to contribute if you are going to post. Simply saying MS cost twice as much as a PP is not contributing. If you have specific knowledge of MS costs or if you can provide a different analysis of the data that has been collected then please feel free to post (read - actually contribute).

If all you are going to do is make blanket statements without substantiation, please consider that you will soon be considered a troll and dismissed as promptly. That would be a shame if you did, indeed, have something meaningful to add to the conversation.

 

[deonb]

On page 20 you will see a graph, clearly referring to competitors, showing a projected cost per kWh of $345 in 2020. If you read the references you will see that is based on this -

"Cost Survey: Roland Berger Study LiB Value Chain and Cost Model (March 2011)"

Which seems to be this study:
http://www.rolandberger.com/media/pdf/Roland_Berger_The_Li_Ion_Battery_Value_Chain_20110801.pdf

in which they called for a current per-cell cost of $500/kWH and a projected cost of $250/kWH in 2020. (So it appears Tesla added a $100 to $150 /kWh overhead to the cell cost in the battery to get to the $650 / $345 numbers?).


Anyway, Roland Berger then proceeded to correct their estimates in October 2012:

Lithium-ion batteries - the bubble bursts:
http://www.rolandberger.us/media/pdf/Roland_Berger_Li-Ion-Batteries-Bubble_20121019.pdf

"Prices are down to 180 and 200 EUR/kWH [$240 to $266] in 2014/2015"

So either 2020 came early, or the future isn't what it used to be.

- - - Updated - - -

Realist,

Let me take a more German approach to your joining the conversation.

You have been asked to contribute if you are going to post. Simply saying MS cost twice as much as a PP is not contributing. If you have specific knowledge of MS costs or if you can provide a different analysis of the data that has been collected then please feel free to post (read - actually contribute).

If all you are going to do is make blanket statements without substantiation, please consider that you will soon be considered a troll and dismissed as promptly. That would be a shame if you did, indeed, have something meaningful to add to the conversation.

Or to paraphrase:

"You stop sending me information and you start getting me some!"

http://www.hark.com/clips/xyjmtdjhlb-stop-sending-information-and-get-me-information

 

[CapitalistOppressor]

Which seems to be this study:
http://www.rolandberger.com/media/pdf/Roland_Berger_The_Li_Ion_Battery_Value_Chain_20110801.pdf

in which they called for a current per-cell cost of $500/kWH and a projected cost of $250/kWH in 2020. (So it appears Tesla added a $100 to $150 /kWh overhead to the cell cost in the battery to get to the $650 / $345 numbers?).


Anyway, Roland Berger then proceeded to correct their estimates in October 2012:

Lithium-ion batteries - the bubble bursts:
http://www.rolandberger.us/media/pdf/Roland_Berger_Li-Ion-Batteries-Bubble_20121019.pdf

"Prices are down to 180 and 200 EUR/kWH [$240 to $266] in 2014/2015"

So either 2020 came early, or the future isn't what it used to be.

Note that that their updated pricing is solely for large format Li-ion cells. It is well known that 18650 cells are substantially less expensive, so the IEK showing $120-$200/kWh in Q3 of 2012 remains very credible.

 

[blakegallagher]

Glad to see your article What Goes Into A Tesla Model S Battery--And What It May Cost (Page 2) got published CO .... very nice article. It is very refreshing to see an article that is based on actual research into the numbers ... very strange for an article about Tesla

 

[CapitalistOppressor]

Glad to see your article What Goes Into A Tesla Model S Battery--And What It May Cost (Page 2) got published CO .... very nice article. It is very refreshing to see an article that is based on actual research into the numbers ... very strange for an article about Tesla

Yes, I don't get it. The Roland Berger article from 2012 is citing near term battery costs for large format cells that are far, far lower than what the institutional groupthink regarding this subject is.

My quick rule of thumb is that 18650 cells cost something like 50% of what the large format cells do on a per kWh basis. If so, then that translates into a projection of ~$120-$133/kWh for 18650 cells in 2014-2015. Again, highly consistent with our observations, and yet even now analysts at Morgan Stanley and Barron's are comfortable thinking that Musk is some kind of fool. It's like willful blindness.

If you Google "18650 cost" the 5th entry in the list is the 2009 DOE study that I cited in the article. Here is the text Google displays on that entry -

Current Li-ion OEM 18650 cell costs are in the $200-$250/kWh range, of which about 60% are the materials costs as supplied to battery

This isn't rocket science.