Tesla confirms Model 3 will have less than 60kWh battery option

[Garlan Garner]

I'm getting the largest battery offered - no matter what.

 

[garsh]

Yes the M3 is smaller overall but a lot of that is in the front and back. The base for the batteries appears to only be slightly smaller.

While the length of the battery pack may be similar, the Model 3 is not nearly as wide as a Model S.

 

[Red Sage]

If battery cost is already below $190 / KW, with a full year of development time ahead of us, I would like to think that Tesla will make a 55-60 KW USEABLE CAPACITY battery that is cost effective enough for profits, and good enough to pass the 215 mile criteria, even in less than perfect conditions.

It was reported quite some time ago (sorry, I can't remember the source) that Tesla Motors might already be at the $180 per kWh mark. So, I have often used that as the low level point by which Elon's expected 30% savings would come. General Motors has already said that the Chevrolet BOLT has a battery pack that costs them something like $145 per kWh. So, I expect that Tesla Motors cost on Gigafactory assembled battery packs for Model ☰ will be around $126 per kWh. At that amount, a 60 kWh battery pack would be around $7,560 as their internal cost. That amount times four (JB Straubel has said the battery pack represents about 1/4 of their cost per car) comes to $30,240. Which, if it were the build cost for a $35,000 Retail price car would mean there was a 13.6% margin from the outset. So, yes -- I agree.

 

[Red Sage]

in the Internet era, also means they don't get to count your click and their advertisers do not get to show you poorly chosen crap based on your last search or merchandise you've already bought or click bait for naked celebs or how to lose 100 pounds. A good compromise is quote the salient points and attribute the source.

Or tease you to click their wonderful article about the 'Secrets of Warren Buffet' just one more time...

 

[Red Sage]

Yes but 0.30 is rubbish. That will have an effect on range. And I agree with the other poster - you're never going to get near a ground up EV design in a retro fitted fossil car.

I remember when the Chevrolet Corvette, with a 0.32 coefficient of drag, was the single most slippery production vehicle on the planet.

 

[Red Sage]

But not everyone buys the larger battery... Of course I could be thinking way too into the weeds regarding this, but I'm just thinking aloud for discussion.

Everybody? No. But since the Model S was first released the highest capacity battery pack has always been the best seller. I think it has been estimated that the Model S 60 was typically around 25% for the whole time it was available. And the Model S 40 never went over a 5% take rate. Apparently the Model S 70 is now thought to be around 30+% of its sales. And the Model S 85 has gone away in the wake of the release of Model S 90. Tesla Motors may feel as if they 'need' three battery pack sizes to offer, but the market seems to disagree and be fine with just two choices at a time.

 

[SageBrush]

That amount times four (JB Straubel has said the battery pack represents about 1/4 of their cost per car) comes to $30,240. Which, if it were the build cost for a $35,000 Retail price car would mean there was a 13.6% margin from the outset. So, yes -- I agree.

It would not take much movement away from "about 1/4" to eat up all their profit.

 

[Red Sage]

Some of us have been saying for years that the 3 wouldn't need a 60kWh pack to achieve the desired range, so it's not surprising that Tesla agrees with us. The math has always been there.

Mostly I was mainly arguing two points in favor of a 60 kWh minimum:

1) Tesla Motors was surprised by the EPA's move to a 5-Cycle range test, after designing the Model S for the 2-Cycle version, and that resulted in a lower range rating than they had hoped for, rather embarrassingly, so I'd like to make sure there is a bit of 'extra' capacity to get an official 200+ mile range -- just in case something like that that happens again prior to the release of Model ☰ -- with a test that is weighted to benefit ICE over EV.
2) I really want even the base version of Model ☰ to be truly compelling by offering a Performance level unheard of for its price point among contemporaries, so I hoped for a 300+ HP 300+ lbs ft torque rear wheel drive setup that could completely embarrass a BMW 340i, with each upgrade in trim level to demolish the competition that much more, rather than offering something with a HP rating lower than a maxed out Camry.​

However, if it turns out the Model ☰ is significantly less heavy than I had estimated, then I agree a capacity between 50 kWh and 55 kWh will work just fine. I had guessed its weight range might be from about 3,700 lbs for the single motor base capacity car to as much as 4,100 lbs for the dual motor highest capacity version. If it turns out it is instead between 3,300 lbs and 3,700 lbs for those, then a full 60 kWh won't be needed (and BMW is in worse shape than I thought). I still vehemently disagree with those who claim a 40-to-45 kWh capacity would be sufficient for either Performance or Range needs.

 

[Red Sage]

It would not take much movement away from "about 1/4" to eat up all their profit.

The industry average profit margin is admitted to be 6% (though possibly fictional -- I believe most do far better than that) for new car sales. Even at that rate, Tesla Motors would have $32,900 to build the $35,000 car as a whole. Companies that fall below 5% (Suzuki) go out of business in the passenger car segment.

So, if Tesla Motors had $8,225 to go toward a battery pack... A 50 kWh version would be $162.5 per kWh... 55 kWh @ $149.55~ per kWh... 60 kWh @ $137.08~ per kWh... 70 kWh @ $117.50 per kWh.

Suppose you look at it the other way, saying the 'about 1/4' was from the retail amount? Still works out pretty well, because you'd have $8,750 to use toward building the battery pack. If you wanted to have a 12% margin, for a $30,800 total build price, you'd have $22,050 left over for the rest of the car. That happens to be just about the same amount someone here once quoted as the price for a BMW 3-Series 'roller' -- a complete car sans drivetrain.

This can be done profitably.

 

[Red Sage]

The real question is how come the S doesn't get over 350 miles accounting for its weight and a 90kWh pack

Well... The Model S 90 does go over 350 miles on a single charge... If you choose to drive at 40 MPH or less... Much further if you drive 25 MPH or less. Neither of those fits the EPA 5-Cycle Range Test, though.

 

[Red Sage]

I got a lot of push back from several members here when I predicted a 55KWh pack in the base Model 3. The popular argument being made was that Model 3 SHOULD have at least 60KWh since the Bolt has one as well. Makes no sense to me. Anyway, my bet is still on 55KWh with an EPA rated range of 220 miles.

I've noted in my other posts why I 'push back' on the notion. I don't like it still. But if it works, to meet both Performance and Range targets, cool.

 

[Red Sage]

So if 55 kWh = 215 miles and 5.9 seconds or better, what would 110 kWh's be able to reach?

In two years the S/X should have a 110 kWh option so why not offer it in the 3 if someone is willing to pay the premium. My math would say the cost for a 110 upgrade could be $15k (Tesla Cost: 55 extra @ $160/kWh = $8,800)

I figure that one day the Model ☰ P135D Coupe with Falcon Wing Doors and a Liftback will be mine to have, and to hold, and to love, and squeeze, and play with... until it don't move no more. 0-60 MPH in 0# $#!+!!! 1/4 mile in DON'T BLINK... Top speed of 300+ KPH... It's gonna be FUN.

 

[Red Sage]

I still maintain that 55 won't suffice for more than 215 EPA range. As it may sound just a few kWh, its approaching 10%... same difference as between 215 and 194.

Precisely my point. I'd rather have those 'extra' 5 kWh 'in the tank' so as to hold off any potential regulatory or testing procedure changes by the EPA that might crop up at the eleventh hour. If Tesla Motors can build a car with an actual average consumption as low as 194 Wh per mile during the 5-Cycle test procedure, that would be awesome. Of course, when I drive the car it isn't likely to ever do better than 330 Wh per mile... But that is beside the point.

 

[stopcrazypp]

The industry average profit margin is admitted to be 6% (though possibly fictional -- I believe most do far better than that) for new car sales. Even at that rate, Tesla Motors would have $32,900 to build the $35,000 car as a whole. Companies that fall below 5% (Suzuki) go out of business in the passenger car segment.

6% would probably be the industry average operating margin (including overhead; Tesla had never made a operating margin, except for one quarter AFAIK). Average gross margin for the industry is significantly higher (10-20%). Tesla had guided 15% gross margin on average for Model 3. I think Tesla will avoid dipping below 10% on any model.

 

[SageBrush]

This can be done profitably.

I've always taken it as an article of faith that car prices to be delivered in a couple of years are based on some estimates of future price (reductions) and that price could not be possible today.

As for the 'about 1/4rth,' if the actual fraction is say 27.5% rather than 25%, then the final price at 4x wipes out the profit. In terms of the car, that is somewhere in the range of $500 - $1000 excess costs.
I'm not trying to say the Model 3 cannot be profitable, but rather that a lot of things have to go right.

I wonder if some of the delays in prior car models at Tesla were related to internal manufacturing price points not yet reached.

Anyway, I'd be a lot more pessimistic if it were just about any other company.

 

[Red Sage]

It's not the cost/kWh that's saved it's the retail pricing/kWh that lowers the cost of the car to the consumer, and allows Tesla to hit the $35K mark. Getting the needed range from a smaller pack is only a good thing, it means they built an efficient platform.

Well argued, yet I still disagree with the first sentence. The cost per kWh to Tesla Motors is what is important, because that is what allows them to pack as much as possible into the car while remaining profitable even at a $35,000 price point. The retail amount for an entire battery pack is of no consequence until it is necessary to sell one as a replacement part. And that is unlikely to be necessary before an 8-year warranty period is completed.

Your second sentence is correct. Efficiency is a good thing. As long as it doesn't take away from Performance, that is...

 

[Red Sage]

As for the 'about 1/4rth,' if the actual fraction is say 27.5% rather than 25%, then the final price at 4x wipes out the profit. In terms of the car, that is somewhere in the range of $500 - $1000 excess costs.

Tesla Motors knows where the 'about' falls... It could be 22.5% instead, for instance. And if it were 27.5% then they have a choice to make: 1) reduce the size of the standard battery pack; 2) leave the battery pack alone and hit your build price target by removing something else from the base car (that then becomes an option); 3) eat the difference and expect to make it up with sales of profitable options; 4) allow for a lower, but still acceptable profit margin (even if it is 'razor thin') on the base car; or 5) don't worry about it, because the whole thing is amortized across about 3,400,000 units you expect to build over the course of eight years, the grand majority of which will be optioned to the nines while your internal costs are constantly going down.

 

[SageBrush]

Let's argue that Tesla hits $35k on time, makes the amazing car everybody expects and demands, and collects a nice profit per car along the way.

Then, how much will a MS with an 80 kWh pack cost, or why will people spend $70+ USD for it ?

 

[JRP3]

Yes, but Tesla already started down the wrong path with its model numbering (Model S 70/85/90/etc) based on battery size. That will be on the buyer's mind, top and center. So the larger-than-Bolt battery (at about the same price!) will be essential in order to be able to even start the conversation about efficiency and range. Without it, Tesla will be starting out at a disadvantage.

We don't know how they will name the Model 3 vehicles, and the Bolt does not have the pack size in it's name as far as we know. EPA range will be the metric that everyone cares about. Plus, look at the Bolt. I mean really, it's just not a concern. Also, Tesla might be able to offer the next level of battery, maybe another 15-20kWh's, for less than $5K.

Recall what Intel had to do when all people seemed to care about as how many gigahertz the processor ran at. Microcode efficiency, cache size, and all that, made a bigger difference, but they were losing out to chips with faster clocks. Now we have meaningless processor and family names.

And Intel still dominating the PC chip world.

 

[Red Sage]

Let's argue that Tesla hits $35k on time, makes the amazing car everybody expects and demands, and collects a nice profit per car along the way.

Then, how much will a MS with an 80 kWh pack cost, or why will people spend $70+ USD for it ?

I wouldn't worry about it. Because by then, the 90 kWh battery pack will be the base version, and a 120 kWh battery pack will be the top-of-the-line. No one who buys a BMW 5-Series cares that they share an engine with a 3-Series. No one that gets a BMW 7-Series cares that they share an engine with the 5-Series. People buy what they want, need, or can afford. And people who buy the Tesla Model S will do so to blow the doors off of AUDI A8L, BMW 7-Series, Mercedes-Benz S-Class, and Porsche Panamera -- because they can.