Can you share links/sources for this? I'd like to learn more about this.
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Can you share links/sources for this? I'd like to learn more about this.
Losing 20% capacity in a year is very unlikely. LFP has excellent durability. If true, it would have to be a result of manufacturing defects.
I would be disappointed if Tesla does not pursue BES (Battery Energy Storage).
They can easily match gross dollar margin that they can get per kWh of the battery pack in Model 3 (assume 55kWh M3 with ASP=$42K :0.25 x 42,000 / 55 = $191) by selling BES at just $100+$191=$291, i.e. at a whopping 35% discount from the currently advertised TE pricing, i.e. undercutting any competitor's pricing by a wide margin.
On top of this, since TE requires fraction of operating expenses as compared with TA, it will bring significantly larger net profit.
IMO it would not be wise to put TE on a back burner until M3 is ramp. There is a lot of synergy in R&D, with huge profit that can be achieved with the small incremental expense.
Also important to note, the 145 USD/kWh seems to be fixed until 2019. LG Chem may be planning on losing money at first, and then make up for it at a later date.
Well, that explains why GM is limiting Bolt production to 30k units per year. Even if GM is masochistic, LG is not.Also important to note, the 145 USD/kWh seems to be fixed until 2019. LG Chem may be planning on losing money at first, and then make up for it at a later date.
I'd like to see some more sources/evidence Autoline Daily's John McElroy... just one quote isn't very convincing to me. Also the E-Today articles doesn't appear to know or state what LG Chem prices to other customers are but it seems like lots of speculation.
Here's one convincing evidence that Samsung SDI (and LG Chem) aren't too far behind Panasonic in terms of quality and cost of cell...
Tesla was negotiating with Samsung SDI to provide cells for the Model X (appears to be confirmed both by Tesla and Samsung). They were in very late stage talks. The deal eventually didn't go through but I think it was more because Panasonic was able to fulfill demand.
Tesla in talks with Samsung SDI for battery supply deal
Also, Tesla has considered using Samsung and others as a supplier for TE cells.
Why Tesla Has Been In Battery Talks With Samsung for Years
Tesla Considers LG Chem, Samsung SDI, & SK Innovation For Batteries (article mentions Model 3, but probably cells for TE)
In other words, Samsung (and LG Chem) have battery tech and production capability similar to Panasonic. They can provide very good quality cells at a very good price... or else Tesla wouldn't consider them.
Also important to note, the 145 USD/kWh seems to be fixed until 2019. LG Chem may be planning on losing money at first, and then make up for it at a later date.
$145 is whopping $100 less than LG Chem is charging others. They are most definitely loosing money on the cells at this price.
There are actually, two sources in the quote I provided: Autoline and South Korea's E-Today.
There's no way IMO that Tesla can charge a 65% margin on BES for any significant length of time before competitors come in and we see margins much, much lower.
Tesla doesn't have a monopoly on battery tech or battery production. As mentioned in the links I just shared in the other post, Tesla even is considering using Samsung and others to supply TE cells. In other words, Samsung SDI, LG Chem and others have competitive prices and they can also sell cells to BES competitors.
What Tesla adds is the overall tech/software that just makes everything work. But that's not something that can't be copied.
Tesla might have an advantage if they can get an early start with the GF, but it's just a matter of time before other companies build larger and larger factories and compete with GF costs as well... although GF might be slightly lower (ie., 5-10% lower), I don't see GF cell costs being more than 20% lower when other companies have had some time to build out their gigafactories as well.
There's even risk that BES becomes a commodity business and it's race to super low margins.
I mentioned the E-Today article saying that I don't think the reporter even states or even knows what LG is charging to other customers.
If LG Chem's cell costs are so much higher than Panasonic's, then why would Tesla consider buying TE cells from LG Chem, Samsung SDI, and SK Innovation? And why would Tesla consider buying Samsung SDI cells for Model X as an additional supplier to Panasonic?
It's all Chinese so I think it will be hard for non-Chinese to know about these. But here they are:
Degradation:
【说客】[之一]追寻比亚迪e6电池万次寿命的真相_汽车之家
There's a figure under section "3.相对可靠的实测数据" showing real-world samples taken from e6 taxi fleet in Shenzhen city.
Performance and specific energy density:
Basically just look at their official numbers for the e6.
e6, pure electric car | Auto | BYD
Price:
I don't really have a quotable source for this. I took an e6 taxi in China this year and chatted with the driver and he told me out of the 370k CNY MSRP, a little less than half is battery. That's about $22k for 61 kWh, or $360/kWh.
I'm Chinese and proud to be one. I'm also an EV enthusiast and wish all EV producers well. I even held BYD's stock in the Chinese stock market for some time in 2014 and 2015. But I take no pride in the "amazing growth" of alternative energy vehicles in China in the past two years. That was just the result of a bad incentive policy system taken advantaged by a host of shameless companies. They use all kinds of ways to "qualify" for incentives, even as lowly as strapping a battery pack to an ICE and call it an EV and get hefty incentives. Almost all (and I use "almost" here just to be on the safe side because I didn't really check "all") companies were doing shady business in this farce and BYD is not excluded. In a report, one of the manager of BYD's dealership took the courage and tried to report to authorities but never succeeded. He eventually hanged himself in his dealership due to the immense pressure from parties benefiting from this game (http://finance.sina.com.cn/stock/s/2016-03-19/doc-ifxqnski7736515.shtml). Thankfully the Chinese government began to get a grip on this matter. And as a result they started to investigate and have some preliminary results (http://www.xinhuanet.com/jrgz/20160908b/).
Also, it's about volume pricing. Panasonic gives Tesla it's best price because Tesla is a committed large volume buyer. But if a smaller player walks up to Panasonic and wants to buy cells, Panasonic is going to quote a much higher price than it gives to Tesla. Same thing goes for Samsung SDI and LG Chem. But when Tesla goes to Samsung SDI or LG Chem, they're able to give Tesla their best price which apparently is comparable to Panasonic's price, or else Tesla wouldn't consider them.
What tesla adds is battery pack technology that is far ahead of others. Battery cells is not the whole story.
I can't disclose manufacturers, but I personally saw budgetary quotations for a 10MWh BES project, with the lowest pricing about 7.5% higher than what Tesla lists on their website for a 2 times smaller BES (5MWh). The current PowerPack pricing at the Tesla site is $450/kWh. Their cost is $190/kWh now, before GF is ramped. That is 57% gross margin. Trust me, your assumption about the competition's cost is off.
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Of course volume matters. Let's not discuss hypotheticals. The fact is that Tesla's price NOW can't be touched by others, and their plans for scaling production are not matched by anybody. This means that their price advantage will persist for foreseeable future. BTW, this is another reason for ramping TE and TA concurrently.
I had a chance to have conversation with an engineer at the global electrical equipment company that is responsible for BES projects. This company is providing power electronics and serves as system integrator for the overall BES project. They buy batteries for their projects from all major players. When I asked him about Tesla, he was convinced that the pricing I mentioned to him is not possible and they are just "buying" projects at this price.
Tesla is a price leader. It is just a fact.
sundaymorning
Active Member
I agree, I recall several times when Elon spoke out against TSLA, stating that he thinks it was over valued. The guy is a straight shooter, says it how it is. You won't find another CEO with this type of honesty.
It appears that you're looking at what's on the market right now in terms of trying to compare TE's price vs other currently players' products.
I'm referring to what the competition is going to look like, and this can include new companies such as startups. They are going to take the competitively priced cells and make a similar system as TE. There will be significant competition as long as there's lots of money at stake. I don't see any significant barriers to entry to the BES market that make it unlikely that startups won't be releasing products that are competitively priced to Tesla's, which will start a very fast decline in what players can charge for BES. The main barrier to entry is competitive cell costs, and nothing is showing me that other companies can't get within reach of Tesla's GF cell costs, albeit it might take them a few more years. Sure, Tesla still has the advantage if the GF is bigger and better, but that advantage will not allow them to make a 50% GM on TE. GM will probably trend down to 20% or so. I anticipate Tesla to be the market leader, but by no means a monopoly.
Not going to dispute what you've laid out, because it's all pretty straight forward. Just wanted to point out though that mathematically, this is a combination calculation. Assuming a 50% chance of each risk factor happening, the chance of your scenario playing out is 12.5% (0.5 x 0.5 x 0.5). That was the point of my "subset" wording. If you reduce any one of those risk factors down to 10% odds, then the scenario risk drops down to only 2.5%.
Looked at another way. If there's a recession next year, but model 3 is released on time, should we still worry about SCTY's debt (which neroden's done a pretty good job showing that it's not a big deal). I'd say no, since the volume of model 3 sales will eclipse the revenue for SCTY and thus any make/break moments for TSLA should only be minimally affected by SCTY's debt.
You are missing my point. What I am saying is that Tesla is price leader now, and has by far most aggressive plans to scale production of TE AND TA. They also known to be moving with their development much faster than any competitors. I do not understand what is your basis in saying that others will catch up.
sundaymorning
Active Member
We really don't know what Tesla's strategy is when they implied buying from LG, it could be a ploy to force yet better pricing from Panasonic. Or it could be a strategy to buy up resources, creating a battery shortage to other car companies. Or it might as well be to provide healthy competition amongst Panasonic and LG for better price. Or it could be that M3 demand is off the chains and Panasonoc alone isn't going to cut it. I agree with V, no need to speak of hypotheticals, bring the facts as it is now forward, otherwise, we're all talking air and blowing smoke.
Last time I checked Apple was going to enter the car market and give Tesla a run at it. All the talks about how innovative Apple was and with $100 billion in cash turned out to be nothing but a dud. How about we start calling apple's car project a "lemon" right now and end this nonsense. I see nothing but duds all around the industry. Yes, people will buy duds only bc they can't afford the goodies, once M3 is out its the beginning of the end. Tesla will be moving quickly to making trucks, roadsters, vans, SUVs, gen 4, gen 5,6,7, etc at neck breaking speed. The industry won't catch up, they'll only lose more ground, Tesla accomplishes in 3 months what others would do in 3 years. Ask any engineer that switched over to tesla.
Last time I checked Apple was going to enter the car market and give Tesla a run at it. All the talks about how innovative Apple was and with $100 billion in cash turned out to be nothing but a dud. How about we start calling apple's car project a "lemon" right now and end this nonsense. I see nothing but duds all around the industry. Yes, people will buy duds only bc they can't afford the goodies, once M3 is out its the beginning of the end. Tesla will be moving quickly to making trucks, roadsters, vans, SUVs, gen 4, gen 5,6,7, etc at neck breaking speed. The industry won't catch up, they'll only lose more ground, Tesla accomplishes in 3 months what others would do in 3 years. Ask any engineer that switched over to tesla.
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