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The broader implications of Semi's ~$70/kWh battery pricing

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What are you trying to say here?
She was discussing the possibility that the price difference in trucks was due to something else than the marginal cost of the larger battery.

I think the only possibility worth talking about is Tesla subsidizing the larger pack. I think that is highly unlikely, but not impossible. I do however agree with another poster from the other thread that Tesla is almost certainly extrapolating out anticipated production costs to 2019-2020.
 
I think the only possibility worth talking about is Tesla subsidizing the larger pack. I think that is highly unlikely, but not impossible. I do however agree with another poster from the other thread that Tesla is almost certainly extrapolating out anticipated production costs to 2019-2020.

Maybe I'm reading too much into this, but wouldn't subsidizing imply that Tesla was selling the large pack for below cost? They could be selling the 500 at for a lesser profit than the 300 mile version, but still at a profit.
 
By the way, this topic is olde news
If you define “olde” as less than two weeks ago, well then yes. ;)

I for one appreciate the analysis by @KarenRei. Tesla looks set to leap ahead of the competition and drive a profound change in sustainable electric mobility at multiple levels.I call that GOOD NEWS.

Thank you.
 
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She was discussing the possibility that the price difference in trucks was due to something else than the marginal cost of the larger battery.

OP's premise in the first post appears t be based on the truck cost delta being 1:1 with the pack cost delta. The issue I have is that the post I quoted seems to imply that is is a proven fact, and if you do not agree with it you are pretending that it is something else.

Even if one wants to pretend that the difference between 300mi and 500mi Semi costs isn't linearly correlated with battery costs,

I have not seen any data to support the 1:1 ratio, (and so would fall under the 'pretend' category) so I was checking with OP what they had meant by their statement.
 
Please don't turn my words into insults. No insult was meant with that phrasing. If you'd prefer, substitute the word "assume" ("... if one wants to assume...").

I have not seen any data to support the 1:1 ratio

Apart from the fact that, in the absence of any reason to the contrary, it would be expected? I presented another datapoint: the overall prices. If the batteries were expensive, you couldn't support prices of $150k and $180k, period. While there is no big diesel engine or transmission, the rest of the vehicle isn't exactly "cheap". It's loaded with tech. EV powertrain components (motors, inverters, chargers, etc) aren't as cheap as many people assume. It has to be built light, which means aluminum and high-strength steel alloys, rather than the mild steel of traditional semis. Etc. The batteries must be cheap, or Tesla has no profit.
 
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Analogy warning: does the sales price difference between 16GB/32GB/64GB IPhones have anything to do with flash memory costs?

It would if flash memory was expensive, meaning a substantial manufacturing cost of the total item.

A quick look at the Apple site, an iPhone 8 for use on Verizon with 64 GB is $700. With 256 GB it's $850. That's a difference of $150 for an additional 192 GB. Amazon lists SD memory cards at around $20 for 64 GB or around $130 for 256 GB. If one assumes that Apple is using slightly more expensive memory due to space restrictions or needing higher specs than the camera cards, then the difference in cost between phones is in the ballpark with the cost of the additional memory.

The answer to mongo's question would seem to be Yes.

Apple might be getting memory cheaper due to ordering in bulk or custom manufacture, but we're talking about retail prices, so the end user would expect to pay retail, not wholesale price for the additional memory.
 
A quick look at the Apple site, an iPhone 8 for use on Verizon with 64 GB is $700. With 256 GB it's $850. That's a difference of $150 for an additional 192 GB. Amazon lists SD memory cards at around $20 for 64 GB or around $130 for 256 GB. If one assumes that Apple is using slightly more expensive memory due to space restrictions or needing higher specs than the camera cards, then the difference in cost between phones is in the ballpark with the cost of the additional memory.

The answer to mongo's question would seem to be Yes.

Apple might be getting memory cheaper due to ordering in bulk or custom manufacture, but we're talking about retail prices, so the end user would expect to pay retail, not wholesale price for the additional memory.

Not really a question, more of an attempt to illustrate the point I was trying to convey, but I'm apparently out of touch with current Apple pricing.
The iPhone 4S was a $100 delta from 16 to 32, and a $100 delta from 32 to 64 so the same price delta for a 16GB jump or a 32 GB jump. If it used two 32GB chip cost which cost $100, and 16GB was free, the numbers worked. If however, it the SD was stacked 16 GB wafers, it was purely price points.
 
Please don't turn my words into insults. No insult was meant with that phrasing. If you'd prefer, substitute the word "assume" ("... if one wants to assume...").

There was no insult taken, because I did not assume anything about what you meant. Your statement could have been interpreted a couple ways, and I only asked for clarification on what you were trying to convey to clear up any potential misunderstanding.

Apart from the fact that, in the absence of any reason to the contrary, it would be expected? I presented another datapoint: the overall prices. If the batteries were expensive, you couldn't support prices of $150k and $180k, period. While there is no big diesel engine or transmission, the rest of the vehicle isn't exactly "cheap". It's loaded with tech. EV powertrain components (motors, inverters, chargers, etc) aren't as cheap as many people assume. It has to be built light, which means aluminum and high-strength steel alloys, rather than the mild steel of traditional semis. Etc. The batteries must be cheap, or Tesla has no profit.

I agree, it would not make sense for Tesla to sell the tractor at a loss. They will get future revenue from charging, but not on the relative order of a video game console.
From a total tractor cost, I agree the battery price need to be <$100/kWh depending on what the motors/inverter/gearboxes come in at. Based on that, the derived pack cost derived from the mileage/ sales price is reasonable. My issue has been blindly using the price points as the core justification for battery cost, but since that number is supported by the total cost, it's purely my philosophical problem.

Thanks for the clarification!
 
It varies when talking about Apple.

But Mongo's point, even when true, does not work in the converse. If the component is expensive, it will surely be reflected in the final price of the gadget.

I'd been working from a position of decontenting a profitable 500 mile version as opposed to adding 200 miles range to a profitable 300 mile version. However, I hadn't quite thought through the implication of the pack price on the profitability of the 500 mile.

0.5 get annoyed by two point trend analysis
1. While ignoring battery price, assume 500 mile version is profitable.
2. Propose that if batteries are expensive, you make even more on the 300 mile version.
2.5 Make an barely related side point about pricing of cell phone pricing which now no longer seems as unreasonable is they once did.
3. Realize the profit in 1 and the expensive batteries in 2 are in conflict (depending on rest of system cost which I can't find good numbers for)

4. Acknowledge one's own fallibility and move on....
 
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Not really a question, more of an attempt to illustrate the point I was trying to convey, but I'm apparently out of touch with current Apple pricing.
The iPhone 4S was a $100 delta from 16 to 32, and a $100 delta from 32 to 64 so the same price delta for a 16GB jump or a 32 GB jump. If it used two 32GB chip cost which cost $100, and 16GB was free, the numbers worked. If however, it the SD was stacked 16 GB wafers, it was purely price points.

It's quite possible that a 64 GB chip could cost less than double that of a 32 GB chip. It's also possible that to substitute a 64 GB chip for a 32 GB chip they need to use a more compact architecture, increasing the price. Or maybe they feel that to handle the demands of more available memory they want faster performance.

I don't think we can draw conclusions from small price differences, and it looks to me as though the price differences are in the ballpark of what I'd expect if they're just charging the actual price for the memory.

Caveat: I really do not understand how these infernal contraptions work. For the first third of my life (more or less) my phone had a rotary dial on it.

Caveat #2: I like my little iPhone SE, which is my first smartphone. I like that Apple products "just work." No hassle, no worries. That has value to me.
 
It's quite possible that a 64 GB chip could cost less than double that of a 32 GB chip. It's also possible that to substitute a 64 GB chip for a 32 GB chip they need to use a more compact architecture, increasing the price. Or maybe they feel that to handle the demands of more available memory they want faster performance.

I don't think we can draw conclusions from small price differences, and it looks to me as though the price differences are in the ballpark of what I'd expect if they're just charging the actual price for the memory.

Caveat: I really do not understand how these infernal contraptions work. For the first third of my life (more or less) my phone had a rotary dial on it.

Caveat #2: I like my little iPhone SE, which is my first smartphone. I like that Apple products "just work." No hassle, no worries. That has value to me.

Oh, there are ways it makes sense, now that I think more about it. But at the time years ago looking at a fixed cost for doubling memory, I just went... Huh?
I dislike Apples because I did computer support for them, lots of doesn't just work back in the day.
 
Oh, there are ways it makes sense, now that I think more about it. But at the time years ago looking at a fixed cost for doubling memory, I just went... Huh?
I dislike Apples because I did computer support for them, lots of doesn't just work back in the day.

My mother had a Mac that ran on OS 9 a long time ago. I hated it. Then a decade ago, give or take a year or so, someone told me that OS X is Unix and Apple had made a clean break from their old operating systems. I switched from Windows (which I hated with a white hot passion) to an iMac and I've been happy with my computer ever since. It made sense to me to stick with Apple for my tablet and phone, since they all work together. I'm not an Apple fanboy the way I am a Tesla fanboy, but I'm happy with my gadgets. And while I can't see spending $1,000 for a phone, my SE does everything I need a smartphone to do.

And I do think that the cost premium for additional memory is in line with the cost of memory.
 
As can be seen from the $30k difference in price between the 500 and 300 mile range semis, the cost for Tesla to produce the battery packs for Semi appear to have plunged.

Assume: 900kWh pack = 540kWh for 300mi = 360kWh for $30k = $83/kWh; assuming the usual 25% margin = $67/kWh. This is actually getting close to - but still plausibly above - raw materials costs for the packs, which should be somewhere around $50/kWh. Approaching raw materials prices has, after all, always been a goal of gigafactory.

But this isn't the point of this discussion; the point is something else entirely. Namely: Tesla's promise of $0,07/kWh renewable electricity for the trucks.

I think some of us may have blown this off as read-the-fine-print hype. Along the lines of "they'll just put up solar awnings which contribute an insignificant fraction of the total, and call that solar energy". But even if we were to assume that, how do we account for the $0,07/kWh power costs? That's cheaper than commercial rates, ignoring the expensive demand charges, and Tesla has a lot of capital costs to amortize (chargers, powerpacks, etc). For example, the recent project to deploy 100MW/129MWh in Australia cost $50M. A typical 8-stall supercharger station without a battery buffer is said to cost $250k, and that's 1/12th the power, so that's meaningful, but the real issue is those powerpacks - there's serious capital costs here!

Industrial power rates are usually in the $0,06-0,07/kWh range. But with industrial power, you pay for all of the connecting infrastructure and a lot of additional overhead. And again, what about the megacharger capital costs?

Some analysts have suggested that the Megacharger stations are a temporary loss leader to sell trucks - that by selling power for cheaper than they can buy it, they're just deferring costs to the future, to a time where they have more revenue and better economics, while in the meantime jumpstarting a switch to electric semis which won't revert. But that would be a hugely expensive loss leader - and selling T-shirts in a truck stop certainly won't pay for it.

I think there's something much bigger that we're missing here, and it comes down simply to: look at the costs on those battery packs. Tesla has stated that Semi is using the same battery chemistry as their grid storage products (aka, NMC). Meaning that these figures should also be directly applicable to future powerpacks. So: 8 stall megacharger storing 12 hours of power with a 30% usage rate and 1MWh allocated per vehicle charge? Only $4m (for 58MWh). This says nothing about Tesla's costs in transforming power, only that in terms of storing it, their powerpack costs should be going way, way down.

But here's where things get interesting. Let's double our battery size to 24h / $8m. Add in a (proportionally) small grid link as backup (or a peaking plant - NG or biomass). Now build your own solar farm. Not mere solar awnings, but a whole solar farm somewhere near the megacharger. Musk said the megacharger stations will be solar powered - let's try taking him at his word. You have a battery buffer and a grid backup; it's effectively baseload. Solar is getting almost absurdly cheap, with average plants coming in at $1,5/W installed (and falling). Let's go with a 25% capacity factor and $1,2/W. Our 8-stall megacharger is averaging ~5MW (counting losses). That's a $24M plant. Add in various overhead (such as transmission to the megacharger) and say $28M. Let's amortize (3% interest) the battery pack over 15Y ($55k/mo) and the solar plant over 30Y ($118k/mo). So $173k/mo (omitting any backup / grid costs). The megacharger takes in $245k per month in charging fees - +$72k/mo in the black. So long as everything else (backup, chargers, facilities, etc) is less than $15M amortized over 25 years, the station as a whole is in the black - before accounting for "truck stop sales" (which are where most gas stations / truck stops today make most of their money).

And solar prices keep on falling. In India some plants are coming in nearly down to $0,60/W. US prices may well average under $1/W in a few years - and expect Tesla to try to stay on the forefront of that curve. Solar capacity factors will of course vary depending on location (wind is also an option), but then again, the above 25% is lower than the current US average. Now, maybe Tesla will want longer than a 24h buffer - maybe 48, even 72h, to reduce the required backup grid connection / peaking needs - but even that shouldn't ruin the equation. 15Y is the current expected lifespan of powerpacks, but it may improve, and Tesla gets to recycle them at the end for those raw materials (which are, as noted, increasingly a large chunk of the battery costs). The solar plant should last longer than 30y (although assuming limited lifespans on the powerpacks and solar farm helps account for maintenance costs, which aren't listed above). Seasonal fluctuations change solar power output, but then again, Tesla can sell excess solar power in high times just as readily as they can buy grid power in low times; solar tracks demand well. In short: I think they can actually do this. Tough? Yeah. And they'll need to prove their economic case to get those kind of interest rates. But I think they can do it.

What happened here to make it possible? Two things.
  • Solar is cheap... with a catch: The low cost of solar power comes with peaking requirements; it needs to be buffered for the night and days with little sun. But the megachargers need their own battery buffer either way. Tesla gets a two-for-one here.
  • Tesla appears to have changed the game on grid storage prices. Seriously, if they can manufacture storage for under $70/kWh and sell it for $85/kWh or so with a 25 margin, solar and wind have just become a lot cheaper and easy to deploy for everyone.
In short, this what I think is going on with those pricing figures. And if there's any word that describes the implications, it's this: profound.

Here are some local commercial power rates here in Northern Virginia that might be helpful for your figures.

Demand charge per kW: $8.88
Consumption charge per kWh: $0.045

I don't have data on connection charges, meter fees or taxes.

Our average peak demand at this property is 2 MW and our average monthly consumption is in the neighborhood of 500,000 kWh. We also have a minimum power purchase agreement for each of the seven meters at this property. This is, of course, a very different application than a vehicle charging station, but I figured the prices might be useful.
 
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But this isn't the point of this discussion; the point is something else entirely. Namely: Tesla's promise of $0,07/kWh renewable electricity for the trucks.

I think some of us may have blown this off as read-the-fine-print hype. Along the lines of "they'll just put up solar awnings which contribute an insignificant fraction of the total, and call that solar energy". But even if we were to assume that, how do we account for the $0,07/kWh power costs?

USA’s cheapest solar power in Austin, Texas – ~2.5¢/kWh for 150MW of solar electricity