Fact Checking
Well-Known Member
Battery costs, whether 100/kwh or 125 or something else, should be mostly fixed.
BTW., while I too assumed mostly fixed battery costs for the purposes of this argument, I'm not sure that assumption is entirely valid if we increase the time horizon to the annual level: Tesla seems to have a decade long track record of successful cost reduction on battery costs of about 5% per year.
It's an open question whether that's sustainable, and most likely improvements are probabilistic and come in bursts not as reliable annual 5% improvements, but if for example pack level costs are $140/kWh, then a 5% cost reduction to $133/kWh gives savings of ~$400 on a 55 kWh pack - not pennies either, but a full percentage point of margin improvement.
(Elon almost smugly declined to cite any battery production costs at the conference call, declared them proprietary information.)
Important raw material costs, such as lithium carbonate prices, have come down from bubble levels: in 2017 to much more reasonable current levels:
The price got almost cut in half. Cobalt dropped from above $40 to around $15.
While Tesla and Panasonic probably use long term contracts that buffer some of the price volatility (which is a disadvantage to the purchaser when the price is dropping), nevertheless I assume it's fair to expect for the prices to be indexed to market prices, and these price improvements will eventually trickle down to Tesla's and Panasonic's raw material costs, even if we ignore production tech improvements such as the Grohmann machine or Maxwell's dry tech.
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