Tesla Battery Cells Are Best Value In Class: 20% Cheaper Than LG Chem

Those Tesla/Panasonic cells are simply more affordable.

According to UBS analyst Colin Langan, the teardown of lithium-ion battery cells produced by Panasonic/Tesla, LG Chem, Samsung SDI and Contemporary Amperex Technology (CATL) revealed that Panasonic/Tesla cells are some 20% more cost efficient than the next best offer (LG Chem).

It’s estimated that the Panasonic 21700 (2170) type cylindrical lithium-ion cells cost $111/kWh, which is $37 less than LG Chem ($148/kWh). If the other manufacturers are at even higher prices, the advantage is tremendous, although we are not sure how much cheaper is to make modules/packs with other types of cells (the overall difference on a pack level could be smaller).

Anyways, 75 kWh of batteries should cost Tesla $8,325 or $11,100 in the case of 100 kWh – before they start building the pack, as we understand. In the case of LG Chem, it would be $2,800 or $3,700 more respectively.

UBS expects that the four mentioned manufacturers will control 70% of the EV battery market by 2025 and that costs will fall by 10% within 2-3 years.

Source: thefly.com, ft.com

This article originally appeared on Inside EVs.

 

[Brando]

Trust a Banker for investment analysis? Especially one such as UBS? I guess this article will count as a "positive article"?
Anything to help volatility, I guess. But what about all that R&D on batteries and the factory cost? Did he include those costs too? Don't forget interest on debt. and the SEC fines.
</rant>

 

[SageBrush]

How does a tear-down of a battery unit allow such fine grained price difference analysis ? Surely the materials composition are about the same between manufacturers.

 

[gryffindor]

what is your proposed alternative as a trustworthy source?

this is a fairly straight forward research report, on one specific component, compared with the same component across different market competitors. typically companies do not detail out specific R&D cost details. even more so for strategic areas like EV batteries where much of the industry is keeping specs under wraps until the cars are market ready. interest and SEC fines do not relate to battery costs so they are not included... ?

Trust a Banker for investment analysis? Especially one such as UBS? I guess this article will count as a "positive article"?
Anything to help volatility, I guess. But what about all that R&D on batteries and the factory cost? Did he include those costs too? Don't forget interest on debt. and the SEC fines.
</rant>

 

[gryffindor]

it looks fine grained since the analyst broke it down into unit cost but this is usually backed out from a top level number

UBS may hire a company to tear down the battery to get the specific components but the material costs are public so no big secret there. the next comes from understanding Tesla / Panasonic's cost of production and yield. the info here will come from their respective 10Ks, internal info especially if they already cover Tesla and Panasonic, and likely quite a few interviews with industry SMEs to calibrate their estimates

then based on UBS's internal projection of battery packs made thus far, the analyst can estimate the cost of production, apply their internal estimate of the yield rate, and they get the total quantity. apply the market value of minerals and materials then the analyst gets the total battery cost. divide by the number of cells per pack and kWh... and you get the $ / kWh / cell. this entire part is simplified but the theory is similar - start from a base unit of cost or production and estimate volume

so yes, if you only compare cost of battery materials the costs should be fairly similar but making batteries is more than just purchasing materials. the 'making' part makes all the difference

How does a tear-down of a battery unit allow such fine grained price difference analysis ? Surely the materials composition are about the same between manufacturers.

 

[SageBrush]

UBS may hire a company to tear down the battery to get the specific components but the material costs are public so no big secret there. the next comes from understanding Tesla / Panasonic's cost of production and yield. the info here will come from their respective 10Ks, internal info especially if they already cover Tesla and Panasonic, and likely quite a few interviews with industry SMEs to calibrate their estimates

In short -- they do not have a clue.

 

[gryffindor]

really?

battery technology and manufacturing is not some crazy voodoo black magic - Energizer is public, Panasonic is one of the largest battery OEMs, companies like CATL generally provide some guidance on reducing certain components (e.g. cobalt) to optimize cost, there are public research papers on battery costs available to read... i’d be more surprised if analysts had no clue what was going on

In short -- they do not have a clue.