Batteries

Published on September 21st, 2015 | by James Ayre

153

Tesla Gigafactory & Battery Improvements Could Cut Battery Costs 50%

September 21st, 2015 by  

Update: Title updated to 50% rather than 70%.

Originally published on EV Obsession.

Tesla will drive down battery-pack-level costs by 70% (down to around $38/kilowatt-hour) once the Gigafactory hits peak production via economies of scale, improved chemistry, supply chain optimization, and other factors, according to Jefferies analyst Dan Dolev.

As part of his recent appraisal of the company, the analyst increased his price target for Tesla’s stock up to $365 a share — largely owing to his analysis of the company’s battery business. As company executives have previously forecast a cost reduction of around 30%, the new analysis seems to suggest that that was a very “conservative” estimate (perhaps meant to be greatly exceeded for PR purposes, or simply because so many factors were/are still in the air).

Tesla Gigafactory new 2

Tesla Gigafactory under construction, by Bob Tregilus (CC BY-NC-SA 4.0)


 

The analyst in question is basing this prediction around an estimation that current Model S battery-pack costs hover somewhere around $250/kWh (kilowatt-hour) — and that the company “can bring the cost of the battery cells down to ~$88/kWh and the pack-level cost to ~$38/kWh.”

Here’s a clip from that:

We believe that Tesla’s use of an efficient nickel cobalt aluminum (NCA) cathode (ie the positive electrode), use of a silicon synthetic graphene anode (ie the negative electrode) that has 2-6x the lithium-ion storage capacity of today’s standard graphite anode, and a possible use of water-based anode solvent, are key advantages. […] Our analysis details a potential path to a 30% cell-level cost reduction to ~$88/kWh by using a more efficient lithium-rich nickel cobalt manganese cathode (vs. NCA), doubling the percentage of silicon in the synthetic graphene anode, replacing the liquid electrolyte with an ionic gel electrolyte which eliminates the need for a separator, and using a water-based electrode solvent for the cathode. The Gigafactory, which is expected to begin production in early ’16, should drive down pack-level costs by 70% to ~$38/kWh via economies of scale, supply chain optimization, increased automation, and production domestication.

As noted by Electrek, that puts things in the sorts of ranges that would probably allow for a very affordable electric vehicle (EV) with a 200–300 mile plus range.

With regard to the estimation that Tesla Model S battery packs cost around $250/kWh at the moment, it should probably be noted here that the company’s Powerpacks are currently selling for around that price — so, presumably it’s a bit lower, but that’s just a guess. Other estimates put Tesla’s battery packs at a cost of ~$200/kWh right now.


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About the Author

's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy. You can follow his work on Google+.



  • Marc

    How can the cell level cost be higher per kWh than the battery level cost; when you are adding all of the additional battery components?

    • Bob_Wallace

      This is a poorly written article. Let’s see if we can put some pieces together –

      “Our analysis details a potential path to a 30% cell-level cost reduction to ~$88/kWh”

      “The Gigafactory, which is expected to begin production in early ’16, should drive down pack-level costs by 70% to ~$38/kWh”

      I think “pack-level” should have been “packaging” or “turning cells into battery packs”

      Put that together and you’ve got $88 + $38 = $126/kWh which is close to other estimates for what finished battery packs are expected to be when the Gigafactory is rolling.

      Battery packs at $126/kWh would mean the end of gasmobiles. A 200+ mile range EV would be cheaper to purchase than a same-model ICEV.

      If Panasonic/Tesla pulls this off then we should see multiple Gigafactories break ground within a short time and, I would suspect, multiple car companies to start talking with Tesla about purchasing battery packs. And/or other battery manufacturers throwing Proud Mary into their fireboxes and building some serious steam….

  • grandpatimbo

    Great news. I have a 2009 Honda CRV that delivers about 24 MPG overall, The car only has 60K miles on the odometer and will last as long as I need to drive. I have considered buying an EV but the numbers just did not pencil out to do so for the less than 10 years I will still be on the road. A huge price drop in the cost of batteries may make it feasible to purchase an EV for my in town driving (about 90%) and keeping the CRV for road trips and my infrequent trips to the lumber yard with a small utility trailer. Such low priced EVs would be a boon to those who have a daily commute with the added bonus of much lower maintenance costs and a much smaller carbon footprint. This really looks like a win-win-win situation. A few solar panels on the roof to charge the car battery would pay for itself in very little time. It is my dream to be able to cut our dependence on the oily bastards who have so long enjoyed such a monopoly on our fuel sources.

  • Mark Moore

    Unless I’m missing something, the headline shouldn’t say 70% reduction in battery cost, but rather 50% (as the cited article states). The 70% reduction is in the battery PACK costs, and a 30% reduction in battery CELL costs, taken together to provide a 50% reduction from ~$250/kWh to ~$125/kWh ($88 + $38 = $126).

  • Wesley Nygaard

    This article doesn’t make any sense. The cost of a pack cannot be less than the cost of the cells per kwh.

    • Steve Grinwis

      One price is the cost of the cells, the other is the cost of turning cells into an engineered battery pack. The costs are additive.

  • Johnny Le

    I’m a big Tesla fan, but I don’t buy the idea Elon gave a very “conservative” estimate. I don’t think Elon knows how to give “conservative” estimates.

    • I believe Elon said the cost would be cut by at least 30% not even taking any chemistry improvements into account, simply from economies of scale.

  • Ticobird

    It bothers me that some reporters write as if they are expert battery engineers when in reality they are so far from an expert they have no idea if what they are writing is true or not. A good case in point can be found in the above article. The author treats a Tesla battery in their current vehicles the same as a Powerpack battery when it should be noted they are not the same.

    • I understand your concern but print is a one dimensional medium, you want stereo, D.
      2D, 3D on a 2D screen or like myself, you may crave 4D Analysis of charts, graphs, alogrithms, 1000s of current articles and e-mails.
      We may have to be 1067 yrs old and brought back 1000 years in time to view it though.
      Just an insight.

      • jeffhre

        We now have anti EV sales people. “Mam, we don’t have a Volt here and that’s lucky for you. Take a look at this Cruze, it gets 40MPG the Volt only gets 37, and the Volt costs twice as much!”

        • Calamity_Jean

          Good thing that the “costs twice as much” is going away within a year or three.

  • Illuminati

    Toyota Camry without option: $22,970
    10 years x 15,000 miles x ~28 mpg x $2.73 = $14,425
    Services and repairs: $500/year x 10 years = $5,000
    Total: $42,395

    Tesla Model 3 without option: $35,000
    Federal income tax credit of up to $7,500
    State incentives: $0 to $2,500 (depending on the State)
    $35,000 – $7,500 – $500 (average incentive) = $27,000
    Electricity cost (¢/kWh) : 8.89 (Washington) to 30.21 (Hawaii)
    Tesla Model 3 “fuel” efficiency = ~4 miles per kWh
    15,000 miles / 4 = 3,750 kWh x 12.5¢ (average cost)
    Electricity cost for 15,000 miles: $468.75
    Subtract 20% for free Supercharger power: $375
    Electricity cost for 10 years = $3,750
    Services and repairs: $250/year x 10 years = $2,500
    Total: $27,000 + $3,750 + $2,500 = $33,250

    Cost of vehicle ownership after 10 years:
    Toyota Camry : $42,395
    Tesla Model 3 : $33,250

    • Michael G

      The Fed tax credit expires after 200K vehicles by corp. so all Teslas are counted under the 200K limit. If we take away the tax credit a Tesla still wins but by as much.

      Also, this being an internationally read web site, we should also include European and Japanese gas costs at $6/gallon. But there, the top Toyota car is a Yaris getting about 40-50 MPG so probably not a huge difference.

      Anyway, your point stands, but with some modification.

  • grindermonkey

    This expected massive shift from petroleum to electric vehicles will place additional demands on the power grid and its generating capacities and in so doing open the door to more “clean” nuclear generating stations and their attendant depleted fuel problems as well. No one seems to have factored this increase/transfer in demand into the equation and the burden it places on both public and private utilities. At the other end of that electric receptacle we take for granted is a giant facility that despite its size has its limitations. The off peak, overnight charge may be the best initial approach but all energy systems have the same limitations that petroleum is currently facing. Is that trip really necessary?

    • nakedChimp

      there are calcs out there and it’s factored in.. no problem even if it would happen tomorrow.
      You’re talking like 20-50% more electricity need to get every transport from petrol to electric.

      Probably some other regulars here will jump in and provide some links for my claims – Thanks for that guys.

      • grindermonkey

        That is a significant increase in demand and could easily provide a rationale to maintain a commitment to fossil fuels.

        • nakedChimp

          1) new coal is more expensive than new RE and building upgrades will be done with RE, not FF
          2) intermittency needs storage and TOU – what better than using BEVs for this
          3) there is enough time for build out/up for RE to accommodate the need for more electricity

        • Bob_Wallace

          The number is likely closer to 20% than 50%. But whatever the number, it’s pretty far into the distance.

          And a considerable amount of electricity now goes into extracting, refining and distributing petroleum. That electricity will be freed up as we add EVs.

          We first have to bring down the cost of EVs to where buyers pick them over ICEVs and the spend 15 years so washing ICEVs out of our system.

          Our coal plants are old and wearing out. The average lifespan of a US coal plant is 40 years. Take a look at the graph on the bottom. Add five years to the numbers on the horizon as it’s a 2010 graph.

          As nakedChimp says, new coal plants are too expensive. If you could get them permitted, which would be roughly impossible.

          As we need additional generation to charge EVs we’ll install the least expensive, which is wind and solar.

          Adding a lot of EVs would be wonderful for a grid that is mainly wind and solar. EVs, as I stated earlier, can be great dispatchable loads. They can charge during supply peaks and stop charging when supply sags.

          When people are driving 200 mile or more range EVs many drivers will be able to skip days of charging those few times a year when supply gets tight.

          This means a larger market for peaks, less curtailment. And that allows for more building, more capacity.

    • Bob_Wallace

      Actually, probably not.

      EVs, on average, need about three hours of charging per day. Many will be able to skip charging for a day or more. That means that EVs can be excellent dispatchable loads, charging when supply peaks and dropping out when supply is taxed.

      What this means is that EVs, used as dispatchable loads, will greatly assist the incorporation of wind and solar onto our grids.

      • grindermonkey

        One of the larger wind farms is operated by the Bonneville Power authority on the hills above the Columbia River Gorge near Portland, OR. It produces 8 megawatts at its peak which is variable depending on the weather and mechanical issues.

        • Bob_Wallace

          Yes, the wind is variable. And the Sun goes down in the late afternoon. Very astute observation on your part.

          Perhaps you might want to read about how one runs a grid on most wind and solar input.

          • grindermonkey

            And perhaps you should read more about the actual output of these devices.

          • Bob_Wallace

            Lord, honey, I’ve been doing that for years and years.

            I’m sorry, my tolerance for people showing up here who know little but want to tell how things are is a bit low at the moment.

          • grindermonkey

            I see that and will overlook you comment.

    • Steve Grinwis

      Electric cars overwhelmingly charge at night, when transmission capacity and generation capacity are very much available. It won’t be a problem

      • grindermonkey

        Off peak power is not limitless since many industrial consumers increase production during these periods.

        • Steve Grinwis

          No. But it is something like 35%, in my Ontario market.

          http://www.ieso.ca/Pages/Power-Data/default.aspx

          That would be sufficient to provide about 48 000 MW Hours of charging capacity. That’s sufficient to charge 8 million vehicles.

          It should be noted that there are about 8 million vehicles total in Ontario. So, we could charge approximately all the vehicles in the province, without investing in anything more than smart charging initiatives. That’s right! Not a single new power plant or major transmission line!

          So, while it’s not limitless by any means, it is both substantial, and not going to be a problem any time soon.

          • grindermonkey

            “any time soon” yes, I agree.

          • Steve Grinwis

            Ya. We’re about 25% market penetration before it we need to start worrying, by my estimation.

    • brunurb

      The thing most people seem to forget when talking about a “massive shift” to EVs is that it’s not going to happen overnight. Compare it to the % adoption of Hybrid cars- the Prius was introduced over 15 years ago, how many hybrids (Prius or otherwise) do you see driving around now? Some, but certainly not anywhere near the number that might have a major effect on the grid, if those hybrids were all full EV.

      IMHO, the same gradual adoption/transition is happening/ will happen with full EVs, and by the time that it could potentially be an issue (assuming everyone plugged their cars in at peak times, which is unlikely anyway) the power companies will have plenty of time to adjust. As others have noted, it really shouldn’t be an issue.

      Besides, isn’t it about time that the grid is upgraded anyway? There’s equipment still being used from 50 years ago, things are only upgraded when they break, resulting in a patchwork of a grid that has some areas able to handle growing loads, and others that are already stretched to the max at peak times. Adding storage (Tesla powerpacks!) can help too, and I think that has been Elon’s goal all along.

      • grindermonkey

        If you are served by a public owned utility, attend one of their monthly public board meetings and ask your questions there. As for the grid, federal and state regulations require it to be maintained and improved continuously to achieve both efficiency and dependability.

    • Calamity_Jean

      Wind power is less than half the cost of nuclear and a wind farm can be built in three years rather than the 10+ that a nuke takes. More nukes not gonna happen.

      • grindermonkey

        Would that your accounting reflected the serendipity of reality. Nature has a way of avoiding the “laws” of supply and demand.

        • Bob_Wallace

          Some governments are run by people who have a little problem with the reality thing. That, for the most part, is where the nuclear dream is still alive.

          It’s going to be interesting to see what the next ‘five year plan’ looks like for China. Their leaders can to math and seem to make very rational business decisions.

          • grindermonkey

            Patience seems to be the watchword here but not at the expense of rational and careful technical planning and investment. If you are not involved directly in these activities your careful observations and criticisms are healthy and helpful.

        • Calamity_Jean

          I’m not sure what you are trying to say here. Wind farms sell electric power at less than five cents per kilowatt-hour. What did you think their price was?

          • grindermonkey

            Take a look at the cost of development and maintenance combined with the erratic output of these wind farms. That data is available from the Bonneville Power administration who built one of the largest wind farms in the US years ago before you come to any further conclusions.

          • Bob_Wallace

            Apparently you don’t understand that grids have multiple inputs. If one source isn’t producing at a specific moment in time the grid calls on another source.

            The renewable grid will work just like the old fashioned grid, multiple sources, storage, dispatchable generation, movable loads.

            As for cost of development and maintenance, that is all rolled up in the selling price. The unsubsidized cost of wind electricity is under 4 cents. Much cheaper than all other ways to bring new generation on line.

          • Calamity_Jean

            Here’s a cost database chart: http://en.openei.org/apps/TCDB/ Please notice that the highest cost shown for onshore wind power is only $0.115 per kWh (eleven and a half cents per kilowatt-hour). I suspect that is from an old wind farm and prices have come down since then. Lowest price shown is $0.036.

            It’s true that the output of any one wind farm is variable (“erratic” is a bit of an exaggeration), but the combined output of several wind farms is much smoother if they are separated by about 300 miles so that they are not in the same weather pattern at the same time.

            For more information you could go to: http://cleantechnica.com/world-wind-power/5/

          • grindermonkey

            Thanks for that very intriguing graphic analysis. I hope that reality matches its measurements.

  • Bob_Wallace

    Come on, don’t ask others to do your work for you.

    Bring the information. Use the link as backup. Here’s how it’s done –

    ” “Currently the cost to manufacture a lithium battery is about $500 (USD) per/ kWh. Tesla recently announced a Super Factory to be built in Nevada, with a promise to get the price of lithium batteries down to $150 USD per kWh by 2020, our current cost estimated for this type of graphene base supercapacitor is about $100 per kWh today and we feel confident we should be able to cut this pricing in half by the end of 2015″”

    The company ” has started to look for areas to set up manufacturing for products that are ready to go to market”.

    http://www.azonano.com/news.aspx?newsID=32513

    They’ve got a product. Perhaps.

    They aren’t actually manufacturing. They have a fairly low cycle life. 500 cycles and a 200 mile range would be only 100k. Perhaps acceptable if the initial price is low enough.

    I don’t see any third party testing.

    These boys up in Canada aren’t exactly out with a $40 kWh storage device. What they have is a claim.

    If they are speaking truth then it’s a major breakthrough. But we’ve had several claims of what someone was going to do which have faded away.

    • Alaa

      It is a good thing Bob. It is good for Tesla because no matter how you look at it, these storage devices need to be done some where. It is only Tesla that soon will have the Giga Factory going. We as in you and I and all the world need many factories like that.

  • vensonata

    The analyst, Dan Dolev, must know that the Tesla “powerblock” is $250 kwh now. A 70% reduction is $75 kwh. The powerblock has a profit built in as well. So the man is saying: $75 kwh battery pack. May it be so!

  • Mr. Shadow

    Yes, the math and engineering behind electric vehicles is solid and cannot be dis-proven. They are better then combustion engines in every way. The only think holding them back is battery capacity and cost. And anybody with a brain knows that cost eventually goes down as technology ages.

    This was inevitable, the age of combustion engines is slowing starting to die off. They will never really leave since oil is cheap and has its uses. But in the end electric cars are just a better choice.

    • nakedChimp

      oil is cheap as long as scale keeps prices down.. remove some wells that can’t recoup costs and prices rise, but not high enough to restart them.. rinse repeat.. 20-25 years from now and you’ll be left with 30% of fuel stations of now.

      • And a similar story with the convenience of filling up on gas. As we get to 50% EVs, how many gas stations will go out of business? How much longer will it take to get to one “on your way home?”

  • ADW

    Where are you seeing $40kWh on this web site?
    I cannot find anything at says that. What am I missing –

    • Bob_Wallace

      On another thread Alaa spoke as if he might have inside information. Or at least information that is not on the linked website.

      I asked him/her there, and will repeat the request here, to provide us with whatever information that is public at this time. Give us enough and we can write an article.

  • Dag Johansen

    I so WANT TO BELIEVE in that story. But I don’t. Just a clueless analyst pumping a stock. But if they get largely below $200/KWH, we should hit a tipping point soon.

    • Bob_Wallace

      Navigant Research (they are not involved in stock sales) reported that Tesla was paying Panasonic $180/kWh last October for cells.

      http://reneweconomy.com.au/2014/battery-storage-costs-plunge-below100kwh-19365

      Add in 30% for turning cells into battery packs and that’s $234/kWh which is not very much more than $200/kWh. Clearly the Gigafactory should shave more than $34 off the cost of battery packs.

      I’m not sure I’d call Dolev “clueless”. His statements are quite close to what I’ve seen from other people who are doing short term battery price predictions.

      I have no idea how accurate his stock price predictions might be. So much of Tesla’s price is ‘speculative’, not based on current earnings but on assumed future earnings. I can imagine a major jump in stock prices if Tesla releases/introduces a $35k, 200+ mile range EV next March.

    • I don’t know if it’s pumping. It is a legitimate/logical argument. Whether that’s how it will play out is anyone’s guess. But if your job is to try to figure it out and put the pieces together, this is certainly one logical effort at that. We’ll see, though.

  • JamesWimberley

    Which is the odd man out: “economies of scale, improved chemistry, supply chain optimization, and other factors”? Actually there are two. “Other factors” sounds like magical thinking. Of the three specific items, two are incremental and quite achievable for any competently run business, which Tesla is. But “improved chemistry” means a different battery; a battery is defined by its chemistry. Mr. Dolev thinks large gains can be made from changing the anode, the cathode, and the electrolyte. Maybe. But Tesla has no particular advantage in battery chemistry, unlike in economies of scale. Suppose somebody else gets there first? I’m not against Tesla, but for investors it remains a high-risk play.

    • Joseph Dubeau

      Elon had said most people working on improving the anode and the cathode.
      He also said, battery announcements were a dime a dozen.

    • eveee

      Get there first? Don’t think it works that way. The market is split into battery providers and consumers. Tesla adds a bit of extra sauce by knowing how to use the batteries successfully, not a small thing, but overlooked by some.

      There is too much nonsense about Tesla killer, blah, blah, blah.

      Tesla doesn’t own a battery company or technology. Neither does GM.

      You tell me. Who is going to attract a battery provider the most, a low volume producer of EVs that is a wannabe, or the highest volume and demand producer in the world with a ready factory to implement the new cell advances and generate huge volumes of royalty and other payments.

      Thats how it really works.

      You have to have the pull to attract the best battery developers. Tesla has that. They are fielding entries for battery chemistry constantly. They sink or swim based on lifetime. So far, Panasonic wins.

      For automotive manufacturers, I know where I would put my bets. The manufacturers with the most EV system knowledge, expertise, and market development win.

      • JamesWimberley

        All right. For the sake of argument. let’s say that the battery suppliers compete and don’t enter into exclusive licensing deals. Tesla as leader can pick and choose the best battery technology on offer. (I’m not convinced it is really that open). In that case Tesla benefits from any improvements on offer – but then so do all the other carmakers. It can only make monopoly profits from batteries over which it has exclusive control. I have no interest in Tesla’s profits, only in its growth, but that’s not Dolev’s perspective.

        • Bob_Wallace

          I can see it playing out both ways. Perhaps one vehicle manufacturer manages to buy up a company with promising technology and it develops into “the” battery. VW sort of claims that with their ownership of a solid state lithium battery, IIRC.

          That happens and one company might dominate for a number of years, taking as much of the market as their production capacity allows.

          It’s hard to invent something that clever people can’t equal, or almost equal, by engineering around.

          But if you’re an independent battery developer then you’re going to be best off licensing to whomever wants to use your product. Best to sell as much as you can before someone hits the market with something better.

          I don’t think we’ll end up with only “one best” battery, at least in the near future. We’re more likely to see multiple versions, all of which are “good enough”.

          Get capacity up from Tesla’s 233? Wh/kg so that EVs can be a bit lighter. More importantly bring prices down to $150 or less for a battery pack and we should see a total move to EVs.

          Let’s say Tesla hits $150/kWh for finished packs. Someone else comes up with a $100/kWh pack that they won’t sell to Tesla. That puts Tesla at a $2,500 disadvantage for the Mod3, not a huge amount. Tesla makes less per vehicle or holds sales up via other advantages.

          • I have a feeling VW is counting on QuantumScape to open up a gold mine. I’m very curious to see how it plays out. Of course, things just got a lot more complicated for VW.

            Anyhow, though, I thin anyone who says they know who will lead in regard to batteries in 10 years is lying. (Obviously, no one here is doing that, but just saying.) But in the coming few years, without a huge unstealthing, it looks like Tesla is far and away the leader.

        • eveee

          There are exclusive deals. The one with Dahn Labs comes to mind. The thinking that only the battery company matters is what is wrong.
          GM tried their hand by buying Envia and got burned. Shows that the situation is more complex. The company that buys batteries has to have some battery savvy or they lose.
          Looks like Tesla is ahead on that score, but things could change.
          In the end though, nobody but Tesla has had the cojones to invest in a GigaFactory. That has a lot of weight. And the rest are showing no appetite.
          That is what convinces me no matter what else happens, Tesla has the lead.

      • Michael G
        • eveee

          Yes. And its a step in the necessary direction. Albeit a small one. The cells are made by LG.

          ” The cells will be manufactured at Korean battery manufacturer LG Chemical’s plant in Holland, Mich.”

          So the comment about the market split between providers and consumers still stands.

          GM’s action might be called the microFactory as compared to Teslas, the GigaFactory. That would be appropriate.

          Both take cells from an existing manufacturer and make packs out of them.

    • Yes, it is definitely an estimate that counts on Tesla making advances that no one can predict/expect right now. imho.

  • Marion Meads

    Enough of the tease, just full speed ahead and sell oodles of these battery packs at 70% less than the competition already!

    • Joseph Dubeau

      70%, I doubt it. They would come up with new manufacturing process.
      The technology was develop/borrowed from cassette tape manufacturing process.
      I believe it when Elon Musk announces it.

    • Steve Grinwis

      The gigafactory is only a couple of months out at this point. Early next year is the date they’re aiming for…

  • Bob_Wallace

    “Tesla will drive down battery-pack-level costs by 70% (down to around $38/kilowatt-hour)”

    People are likely to misunderstand that.

    Dolev is talking about $88/kWh for cells plus $38/kWh ‘package’ them, to turn cells into battery packs.

    This totals out to $126/kWh which is very similar to what Navigant Research was predicting last October. $100/kWh for cells and $30/kWh for packaging.

    As of last October Navigant was claiming $180/kWh for the Panasonic cells plus about 30% packaging costs or about $235/kWh.

    • Dag Johansen

      That is a plausible explanation for that ridiculously optimistic number. But speaker or writer of the piece definitely wrong in an ambiguous manner that kind of suggested that a 30% cost cut initially was in reach soon with a larger 70% cost cut later on.

      • Mr. Shadow

        Why? Happens all the time in manufacturing where a small conservative estimate turns into a larger gain.

    • jax_parrow

      Agreed, this was my reading of it. The link to the quoted piece doesn’t seem to work. To me, the statement of $38/kWh uses the term pack-level incorrectly. Typically you see this referring to the entire battery (cells included) at “pack-level”, but that doesn’t seem to be the case here. I think you agree @Bob_Wallace:disqus. Thus I would very much, this should be and adder to the $88/kWh, not a further reduction. Though I can see there certainly could be a 70% cost reduction opportunity via volume production for the metals, plastics, cooling that goes into the Tesla pack. That is all done on a relatively small scale at the Freemont facility currently. The title and presentation of content are horribly misleading.

    • WeaponZero

      That makes more sense, NCA chemistry has a material cost of 60$ per kwh and NMC chemistry (for storage) has a material cost of 45$ per kwh.

      So you can imagine a 38$ per kwh would simply be impossible for economies of scale short of advancement in chemistry or processing of raw materials.

      Now it might happen in the future, but through advancement of technology.

      • Bob_Wallace

        Navigant Research (IIRC) priced out the material cost of the Panasonic/Tesla cells at just under $70 at today’s (last October’s?) cost.
        I wonder how much those costs might drop as battery manufacturing scales up? I really doubt from $70 to $40 but there may be some downward movement.

  • apsley

    If these numbers turn out to be correct, it is all over for the oil industry.

    • TedKidd

      It ultimately will be correct even if 2018 is optimistic, and I think the writing is clearly on the wall on the second half.

      What was the target that makes Model 3 profitable?
      +/- $150?

      • Bob_Wallace

        IIRC someone recently posted that 40% of the cost of an ICEV goes to the engine and support systems. That would make the cost of a $20k ICEV engine about $8k.

        Assume $2k for EV motor and electronics? $6k for batteries would buy 40 kWh at $150/kWh.

        40 kWh should be enough in a compact car for a 150 mile range (0.27 kWh/mile).

        When/if battery pack prices drop to around $150/kWh then ICEVs are toast.

        A really affordable 150 mile range EV should tear up the car market. It wouldn’t be unreasonable to drive 500 miles in a day a couple of times a year with only that limited range. It could be done with about 3 ‘Supercharger’ stops.

        (With wifi, food and toilet accessibility how many people would find waiting for a quick charge boring?)

        Not the car for someone who drives far often. But for the person/family that takes only one vacation per year and could use the gas savings to help pay for their trip.

        An open letter to Nissan ;o) –

        Come on Nissan. You’re the car company that is best positioned to market a low cost, moderate range EV.

        If your present battery supplier can’t keep up price-wise then partner up with Tesla/Panasonic. Use their batteries and use the Tesla Supercharger system. Drive this train at warp speed, we’ve got a climate at risk.

        • TedKidd

          Needs to be 200+ miles to avoid the dreaded “taper”…

          • Bob_Wallace

            I don’t think so. I suspect there’s a very large market segment that needs a lower purchase price than the need long range.

            A 150 mile range EV, down to 90%/135 miles after a few years wouldn’t be a good choice for a “coast to coast” trip but would be fine for good for the type of vacations most “shallower pocket” drivers would make.

            Boston to Miami for the winter – stick it on the train.

          • Karl the brewer

            Funnily enough i was thinking about this at work today. All 10 members of staff that drive to work have small cars (compact). One member of staff drives 25 miles each way and the next furthest distance is 12 miles. Everyone else is 6 miles or less. All the cars are low to midrange in terms of spec. All members of staff live in houses with at least one other car and 8 out of 10 could charge at home. They are perfect candidates for the 150 mile basic EV !

          • Bob_Wallace

            There must be tens of millions of drivers like the ones you describe.

            If someone releases a small sedan/crossover with ~150 mile range, selling for around $20k I suspect they couldn’t keep up with demand.

            Let’s look at one of the least expensive new cars –

            “2015 Nissan Versa Sedan

            Starting MSRP: $11,990
            EPA fuel economy mpg: 26-31 city/35-40 hwy

            As the lowest-priced new car for the 2015 model year, the Versa delivers on its intentions: great gas mileage, a comfortable ride, decent cargo space and rear-seat legroom at a bargain-basement price. It has some ground to make up in the handling department compared to rivals such as the Ford Fiesta, but it’s still a great value.”

            http://autocontentexp.com/15-least-expensive-new-cars-of-2015/

            Decent interior space, even in the back seat. Add battery weight and the ride should become even better. Get rid of the ICE and any noise level issue goes away. Empty up the space where the engine now is and it becomes safer in a head-on collision.

            40 kWh at $150/kWh = $6,000. Take away $5k to $7k from the $12k for the engine/systems. Price is close to $10k before adding in cost of electric motor and electronics.

            Give it some self-driving features, especially the ability to self-drive at slower speeds in stop/go traffic (lane keeping and adaptive cruise control/self braking) and you’d have a wonderful commute machine.

            (Add in some great speakers. Afterall, it’s going to be a great listening space with the engine noise gone.)

            Why couldn’t this be produced for $20k or less, and produced soon? A couple of years to build the battery plant to crank out the batteries and to design/gear up for production.

            The Gigafactory is expected to cost about $5 billion. What major car manufacturer couldn’t come up with $5B for the battery plant?

            You’d damn near own the car market.

          • Karl the brewer

            ‘There must be tens of millions of drivers like the ones you describe.’

            I know. And when the penny drops for these drivers someone is going to make an obscene amount of money 🙂

            I wonder if it has crossed the minds of anyone at VW that they could have built 3 Gigafactories with $18 billion 😉

          • MorinMoss

            VW’s losses have now widened to ~$25+ billion off of market cap and another $7 billion set aside to remediate the hacked autos.
            More than enough money down the tubes that could have financed an entire auto revolution, from soup to nuts.

          • Instead, it was spent on trying to cheat the system (immorally harming humans) and getting caught.

          • lol 😛 😀

          • Sreehari Variar

            Just what I was thinking, three full giga factories in flesh and some pocket change. That shouldn’t hurt at all!

          • flubalubaful

            Maybe the government should demand they use the money to build two factories and produce a small 150 mile range vehicle for £15 000 AND SUPPLY NO LESS THAN 10 MILLION VEHICLES AT THAT PRICE.

          • John Moore

            Dear Sir,
            I would like to order one of these automobiles now. I’ll take the stripped down model, the one you advertised for $17,988. I want it in the “Environmental Green”.
            I would ask for a more loaded version, but I need a low payment, and I need to be able to take the kids to soccer and everywhere without spending so much on fuel.

            Please find enclosed my deposit of $5000, as I’m taking you at your word that you won’t have those pesky delivery delays that Tesla always has.
            P.S. You’ll be hearing from a bunch of my neighbors soon.

          • Bob_Wallace

            I wonder if Tesla would get in bed with a company that wanted to turn out an ‘econobox’ EV with decent range.

            Would they (along with Panasonic) be willing to supply the batteries and do the electronics design? And let the new company buy into the Supercharger system?

            My initial reaction is “Why not?”. It would allow Tesla/Panasonic to start battery factories around the world faster and to expand the Supercharger network faster. Tesla would still have an enormous market with the middle range up through luxury. As long as they didn’t lock themselves in with a bad contract Tesla could expand down into the lowest price market later.

            One of the companies that already is manufacturing cars should be able to get into business in a couple, three years. Lutz got the bug to build the Volt in 2006, GM showed a concept version in 2007, they went into production in 2010. This time there would be no ‘new’ to invent. Just downsize what Tesla is already doing and pay Tesla the development money.

          • Dallas

            You would need way more than one $5b battery factory to do that…

          • Bob_Wallace

            Since the world produces about 90 million new cars a year we’ll need about 180 Gigafactories.

            Currently 3-4 are being built. Tesla is the only company doing it in one building. LG Chem is ramping up to about the same level of production but spread over multiple factories. BYD is going big buy I don’t know what their plant(s) look like.

            Other battery manufacturers are also increasing capacity but I don’t know of any that are going as large scale right now. I suspect that if the Bold and Tesla 3 come out and start selling well we’ll see a lot of battery capacity being built.

          • Rick Thurman

            In many areas, city or county workers are required to live within city or county limits. That guarantees living within close range for an, ahem, easily identifiable market of employees. Why, you could even tailor a whole retailing program to that, even if it’s only a targeted mass mailing.

          • Indeed. Something that should not be forgotten is that the “average” household has 2 cars. Generally, a family takes a driving vacation together in one car — not in two. So as long as one car can do that once or twice a year long-distance trip, there’s no real compromise in having the other car incapable of that. And given the short daily driving of ~40 miles, 150 miles should be plenty to cover weather, highway driving, battery degradation, illogical anxiety, etc. Of course, higher-income households where the people drive much more may have bigger requirements, but the average home doesn’t need two 200-mile cars. What they need is to cut their costs.

          • TedKidd

            Do you realize what the incremental cost of the larger pack is at $150?

          • Bob_Wallace

            About $1,500.

            That would make a $15k car a $16.5k car.

            Here’s an idea. Why don’t you purchase a car with the range you want and worry less about what someone else might want to purchase?

          • TedKidd

            Hey Bob, here’s an idea:

            Why don’t you purchase a car with the range you want and worry less about what someone else might want to purchase?

            What EV do you own?

          • Calamity_Jean

            At least seven out of the ten could replace their current ICE car with a used off-lease Leaf. The only three who might not be able to are the one that’s 25 miles away and the two that can’t charge at home. They don’t need to wait for the 150 mile EV.

          • Karl the brewer

            I know! Prices on almost new Leafs have plummeted since NIssan announced that longer range vehicles are in the pipeline. Earlier in the year you could pick up a Leaf from our local dealer in the Uk with 1000 miles on the clock for approx £20,000. As of last week thats down to £15,000. Used prices for 2012 /2013 models are of course even lower.

          • Calamity_Jean

            Do your co-workers know that?

          • Karl the brewer

            Excellent question. I have mentioned it to three of them and am working my way through the others. I got some interesting reactions as you would imagine. Two of them queried the range and the other wants something larger and cheaper to shove his bikes in as he does a lot of mountain biking.

            What struck me about their reactions was that they were all either unaware of EV’s or had never seen one in the flesh and assume they are like golf buggies

          • Calamity_Jean

            Once one of the employees of your company comes in with an EV, I bet a lot of them change over. Getting the first one is the trick.

          • In 2013, a nationwide survey found 22% of people were “familiar with” the Tesla Model S, and 31% the Nissan LEAF. And take into account that some people surely lied simply if they thought they recognized the name. I don’t know %s for today, but I’d bet the majority still don’t know almost anything about EVs on the market.

          • eveee

            I was thinking destination charging changes the perspective also. There is probably too much focus on long range, but really, 150 miles opens up the market a lot. Some of the limitations have to do with the fact that current non Tesla EVs have poor aerodynamics. So highway range is 60 to 70% of published range specs. A Leaf can manage only about 50 to 60 miles at highway speeds. Thats part of the advantage of a Tesla.
            IMO, I go with the cost driver first. That has more impact than features as long as the range meets a target audience requirements.

          • John Moore

            I want to agree that lower purchase price is important, more important than is currently being talked about. There is just so much discussion of range.
            I saw speculation somewhere recently that the Leaf might have a range of 200 or 250 miles or whatever, by fall of 2017. But it seems to me that it’s one thing to demand, or even feel the need for this range, at $30k. It’s quite another discussion at $20k. I’m guessing that people would jump at a 150 mile range at $20k.
            So when this discussion of price comes into play, it really mitigates the need for Tesla like range.

          • TedKidd

            That bottom up thinking is the approach the majors are taking. Tesla is proving that is bad thinking, and it’s not what is driving the market.

            The cars that succeed first will be 110% cars. I don’t think you’ll get many poor people thinking they’re OK buying an 80% car when 110% cars are available. The first opportunity for your poor people will be able to buy these cars used. Eventually top down will bring them cheap 110% cars. Thinking they don’t want or deserve them seems narrow, and thinking they don’t have the same adopter curve as other subsets is likely wrong.

          • Bob_Wallace

            The “majors”, for the most part, are doing nothing. A few compliance EVs and Nissan largely twiddling its thumbs.

            Tesla has already succeed at the “110%” end. Tesla’s success seems to be producing the very significant drops in battery cost that will make a <$20k EV possible in the very near future.

            If the goal is to get people off petroleum then the quickest way is to offer product at all price points, not wait until the relatively few luxury cars become so road-tired that they can be sold for under $20k. That's a route to failure.

          • TedKidd

            I think that hits the scale problem. Scale will require time.

            I suspect China will eat everyone’s lunch on the sub $20k market, but that’s probably 5 years off.

          • Bob_Wallace

            China may. And that’s fine with me. I’m more interested in dealing with climate change than with who owns the car factories. All the owners will be humans.

            BTW, it’s very likely the EVs sold in the US will be built in the US regardless of who owns the factory. As Chinese labor cost rise (happening) and more of the manufacturing is done with robots (happening) more production will occur close to the market into which the product is sold (happening). That will be especially for more expensive to ship things like EV batteries and bulky car parts.

          • TedKidd

            I’m in complete agreement on the climate issue.

            We are working on creating a process for delivering Measured Comprehensive Home Performance to everyday homeowners. In an industry that promises pie in the sky savings and huge “return on investment” we tell the truth -which is EE is NOT free but when done thoughtfully it can HELP pay for itself. We are advocating for transparency of results http://bit.ly/ESHPclientHPdata – and ultimately creating a competition around results.

            My background is Economics and Financial Planning. I don’t like what I’m seeing in the compliance car market as these cars come off lease. Jack Rickard does a really nice job of expressing the problem in the video I posted in a comment above.

          • Bob_Wallace

            Do you mean the low market prices for used EVs?

            If you look at the overall pricing for used EVs it is not as low as the $10k for a 2012 Leaf stuff one commonly sees. That’s a bottom of the range price.

            Furthermore, some people are making comparisons based on MSRP, not what the first owners actually paid. Most first owners, including lease companies, received at least a $7,500 discount so depreciation needs to be calculated off that lower actual cost.

            All that said, it does seem that EV have been depreciating faster than ICEVs. But I expect that to reverse as the general public learns more about EVs. And as EVs offer more range.

          • TedKidd

            Most leases have residual very well dialed. This is critically important, as it determines future lease pricing and risk cost.

            I leased my Smart for $150 a month. If the leasing company can’t sell my Smart at the end for around the residual they projected, do you think I’ll be able to get another one for $150? I would never have acquired the car if the price was $250, alternatives are too much better. (Actually I bought it as a second car, so I never wouldn’t have bought anything if it were more. Then after using it for 3 months it became clear I couldn’t justify the TDI Sportwagen depreciating at $250 a month while collecting cobwebs in the garage.)

            I’ve also sold 6 EV’s that I’m aware of. I understand the decision making process people go through.

            I don’t think the public is going to “learn” more about these cars in a way that drives value up because time is making them obsolete faster than public acceptance will impact the demand curve. The only way value goes up is if the manufacturers get behind them with CPO or some sweet warranty offerings.

            Irrelevant anyway. This is an adopter curve thing. I think we’re reaching saturation of early adopters and we need to have vehicles that appeal to early and late majority. We need cars that cross Moore’s Chasm and appeal to pragmatics, that’s where the sustainable market resides:

            http://www.4inno.com/wp-content/uploads/2015/01/TechnologyAdoptionCycle_Chasm.png

            “the early majority decide whether to buy based on information from their peers. They constantly ping their peers to find out what’s being talked about. When there’s enough validation for a new technology, they make the jump.” http://blog.fastfedora.com/2013/05/crossing-the-chasm-revisited.html

            Getting almost there is crazy risky. Instead of aiming for the edge I think we should aim for the middle. Deliver a car that doesn’t need defending.

            Once you start defending, early majority thinks “Yep, not ready for prime time”.

          • Michael G

            Good points Ted, and I would simply add that 2/3 of all car sales in the US are used cars. So the new car buyers (who average 52 years old) will go for the 110% and the rest will wait a few years until those come off lease.

            Age/income of new car buyers here:
            http://www.autonews.com/article/20150804/RETAIL03/150809938/car-buyers-getting-older-richer-nada-economist-says

          • Bob_Wallace

            Boy, do I really not agree with that.

            I know lots of people over 52 who have bought new cars. They don’t buy $100k or even $75k cars, they buy $35k or less new cars.

            Go sit by a busy street and see how many $75k+ cars drive past you and how many <$35k cars drive past. (Price when new.)

          • Michael G

            I think you read what I wrote in a hurry. New car buyers average 52 y.o. – so half are older half are younger by definition of “average”.

          • Bob_Wallace

            Still and all – look up what sells. We aren’t living in a world in which the rich buy Series 7 BMWs new and the rest of us sit around waiting for them to become sufficiently worn down for us to afford.

          • TedKidd

            Thanks Michael. I think we need to get Big Auto thinking this way because
            Tesla can’t do it alone.

            I heard Chevy has delayed introduction of the Volt, possibly due to all the capital losses on their lease vehicles. Leaf is experiencing these same punishments. Good EVTV Episode discusses this: https://youtu.be/AhgHgKpZppI?t=41m38s

            Bottom up has no certainty of success and fair certainty of failure due to residual value problems. Manufacturers need to support the whole lifecycle of these cars in a way that gives consumers confidence. Tesla has succeeded here because they have a 110% car, and they have CPO that assumes all the risks that are big and scarey to consumers.

            They need to make cars people will buy used, and they need to build a sales network that can SELL the cars new and used.

          • Bob_Wallace

            “Bottom up has no certainty of success and fair certainty of failure due to residual value problems.”

            I think it more accurate to say that bottom up had limited likelihood for success because there wasn’t enough potential profit/volume to drive down battery prices.

            Tesla has apparently driven down battery prices. Other battery companies are following their lead. Within the next few years there should be a meaningful supply of battery packs priced at or below $150/kWh.

            At that point it is no longer “bottom up” or “top down”, it becomes “who will manufacture for each market tranche”?

            I’ve no doubt that people will buy a used $15k EV over a used $15k ICEV. It’s about getting the $15k EVs on the road so that there are used ones latter on.

          • flubalubaful

            For most that only drive around town yes 150 miles is adequate, but for those that 2 times a year travel on long holidays that is not enough 250 real miles range should be the target for the middle income family car.

          • flubalubaful

            I believe that the AA recommends a break every 2 hours for 15 minutes, but lets push that to 3 hours which is what i have done on many trips just so we can get there and start the holiday and book into our hotel or get the tent up before it gets dark. With Kids i would suggest stopping every 2 hours no matter what so they can get out of the car stretch there legs and go to the toilet, even if they say they don’t need to they do normally and that is from a lot of experience.

            So lets say that 3 hours is an optimal time to stop. That means a range of no less than 210 miles at 70 mph on the highway with its ups and downs and overtaking and speeding up and slowing down etc.

            According to real world results we would need a Tesla that could, according to Tesla do 300 miles range to get the 210 and still have enough spare range in case there is no charger right there at 210 miles.
            Most Tesla drivers seem to be getting about 240-260 miles range with normal driving and a little more if driving under the speed limit and using other skills to save energy like slower uphill and faster downhill drives.
            As most services n the UK are around 50 miles apart or just a bit more then we see that 300 miles is the absolute lowest range needed to drive in the UK. In America it is different as you do not have services every 50 miles (roughly) but in the UK a real world range of say 250 miles would be more than enough to travel even the longest trip from the north to the south of England and to charge only once or twice if travelling to the north of Scotland.

            If Tesla or any other car manufacturer hits the magical 350 real world range then they will destroy the petrol or diesel car market in the UK almost overnight especially if the price is under £20 000 which with the latest news on battery cost and weight could happen in the next 4 to 5 years as big manufacturers try to compete with Tesla..

          • TedKidd

            How awesome would it be if they designed the Model 3 to be able to carry the 90kwh pack?!

            I don’t think we’ll see a change to Supercharger spacing strategy. Probably the cars will reach a point where they only need to stop at every other one.

            The other thing that is expanding is destination charging. Supercharging is for travel. Destination charging is for providing energy once you are at your destination.

        • Marion Meads

          The ICE generator, last time I checked at Home Depot, a 22 kW generator retails for $4.8K, so its cost is still cheaper than the $4.8K.

          http://www.homedepot.com/p/Generac-22-000-Watt-Air-Cooled-Automatic-Standby-Generator-with-200-Amp-SE-Rated-Transfer-Switch-6551/205398231

          • Bob_Wallace

            I suspect that generator is cheaper than the engine that is fit into autos. Emission regs are likely lower. Expected lifespan less. The Generac you list is air cooled, not water cooled.

        • Matt

          We hit the $20k EV with 150 mile range and we will be battery supply limited for a while. We would need to be seeing a bunch of mega factories looking for locations.

        • TedKidd

          That’s two posts in one. I fully agree with the first.

          The second is disconnected from reality. The Supercharger network is significantly completed. 150 mile range is insufficient for traveling between some stations in winter, even if you’ve waited for a painfully long full range charge.

          Not sure why you conclude the additional 50 miles range is a huge make/break in cost. Is it some deep seated “good things require sacrifice” mindset?

          I don’t want a 90% car, I want a 110% car.

          While a little more battery may be large now I don’t think it will be in 2 years. And just attracting a broader group of early adopters with a 90% car seems a wasteful incremental step.

          We don’t need to go cautiously, we need to go faster than that! Let’s have cars that meet 110% of our expectations and appeal to the early majority. That group doesn’t want hypothetical infrasturctures, they want things that exist. A 200 mile car is a 110% car given TODAY’S infrasturcture.

          Elon Musk’s approach has always been to go to 110%, this quells reasonable objections. This is a smart strategy. In his view going to 90% is stupid, you’ve done most of the work yet not removed the perfectly valid objections.

          He’s right. Current EV’s are 60-80% cars. Going to 90% is dumb. Let’s go to 110% and remove all the reasons for buying ICE.

          • Bob_Wallace

            In no way is the Supercharger system “significantly completed”. It’s only just begun.

            “Not sure why you conclude the additional 50 miles range is a huge make/break in cost.”

            I was trying to think through the EV “econobox”. An EV selling for less than $20k, hopefully for less than $15k. If you want to spend relatively small money then you don’t get all the features of a more expensive vehicle.

            You want to go 110%. There’s a huge market share that can only afford to go something less than your ideal.

          • TedKidd

            The Supercharger network is significantly complete. Look at the map. Very few desserts (My Aunt and Uncle have to go North from Jackson WY before their Eastern migration. Nebraska is empty.).

            Look at 2017 projected, fills those gaps in.

            Do you think poor people are early majority or late majority? Furthermore, those people you talk about can buy a beautiful used Leaf today for under $10k. Why would they buy a crap box for $19k if they could buy a nicer car for less? Imiev sales indicate bottom up is not how this will succeed.

            Do you think the bottom up approach is the path to building the EV market? Maybe that’s where we disagree. I think you are looking at this 180 degrees wrong, and the evidence suggests a big step back will allow you to see. I think technology is top down, and EV’s are technology.

            First, would you agree EV’s wouldn’t meaningfully exist without Tesla?

            Compliance is significantly driving the rest of the market, not innovation, and compliance is SLOW. Tesla’s approach is transparently stated as top down. The top down approach is key to quickly driving innovation, scale, technology, and affordability.

            The 110% car can/does exist TODAY. Granted it’s big $, but the fact it even exists is AMAZING! That car is significantly what is driving the handicapped car market too. A small amount of people might be satisfied with an 80 Leaf for the rest of their lives, but they are the boutique. Ever cheaper 110% cars are the path to bridging the gap from early adopter to early majority. Late majority and low income will have these cars available used AND the crappy cars you advocate for.

            Your incrementally better bottom up approach is slow, boring, and historically unsuccessful. Just as Corvettes sell mini-vans, significant number of owners wouldn’t buy a Leaf if Tesla didn’t exist. If they didn’t have the hope it is just a bridge to a future car that doesn’t entail sacrifice they wouldn’t accept the sacrifice.

            Tesla is tangible evidence that is coming. And without Tesla, these other companies would feel significantly less pressure to improve their cars, and they’d probably be selling way fewer cars. Change using your strategy would take 100 years.

          • Bob_Wallace

            The Supercharger network is far, far from being complete. It currently covers only major highways and in no way could handle the demand once Tesla is producing a few hundred thousand EVs per year.

            You really think there’s no market for a 150 mile range EV selling for less than $20k?

            I’m not advocating for a solely bottom up approach. I think Tesla did a very wise thing by starting at the top. I’m suggesting that there is a very large ‘bottom’ segment and that we are on the verge of being able to sell EVs into that segment, based on projected Tesla battery prices.

            You seem to be reading things into my comment which are simply not there.

          • TedKidd

            The Supercharger network is complete. When my Aunt and Uncle bought their first Tesla, it was an 80% car. Now it is a 110% car – because of the Supercharger network.

            This doesn’t mean the network won’t continue to grow, but that’s not the same thing. For the vast majority, it provides the ability to go all the places they ever want to go.

            I don’t think there is “no market” for a 150 mile car, but I don’t think it delivers enough to be a true ICE replacement. It is an 80% replacement.

            I think those cars will quickly become iPhone 3’s. They will depreciate WAY faster than other cars, and that goes right back to cost.

            A car I pay $30k for that’s worth $20k in 5 years costs me less to own than a $20k car worth $3k. Individual consumers may not completely grasp this, but it will be reflected in the marketplace.

            It will also BURN folks that don’t understand it, which ultimately really harms the market.

            To conclude, these cars need to be 110% cars to not burn people. There needs to be broad support as the cars get 3-4 years old and start hitting the used market. 80% cars will depreciate too quickly.

          • Bob_Wallace

            “The Supercharger network is complete.”

            Ted, how can you say something so obviously wrong and expect to be taken seriously?

            Even you contridict yourself a few lines down –

            “For the vast majority, it provides the ability to go all the places they ever want to go.”

            The universe of all drivers – the vast majority = the drivers who are not yet served.

            “I think those (150 mile) cars will quickly become iPhone 3’s. They will depreciate WAY faster than other cars, and that goes right back to cost.”

            And I think you’re wrong.

            Phones lose value quickly because the next generation of phones is not all that expensive. They’re impulse purchases for some people.

            Cars are major purchases. The lowest cost cars may depreciate faster than mid-range or luxury cars, I simply don’t know those numbers. But EVs are likely to depreciate slower than ICEVs once people better understand them.

            If you’re a working stiff who needs to get from home to work to grocery store to home wouldn’t you pay a bit more for a car that cost you very little per mile to drive?

            You going to pay $5k for the gas Fusion or $6k/$7k for the EV Fusions that saves you a thou or two a year in operating expenses?

            There simply will not be an adequate supply of 110% cars. Not enough people have $75k+ to spend on a new car.

          • TedKidd

            Because it is not wrong. Look at the map. Talk to Tesla drivers. Ask THEM if there are places they want to go that they can’t go. Of the 80k or so owners I bet you have trouble finding 100 that can’t go everywhere they want to go. Of those 100 I bet 95 will have that problem solved in under a year.

            And the car value thing is not wrong either. An easy way to understand the used car market is eBay. Check sold listings. Phones lose value not because they are cheap, they lose value because the next generation makes them obsolete. As the “obsolete” increment declines you can see older phones retaining their value.

            Maybe that’s not the best analogy, but the fact remains you can buy a $35,000 Leaf with under 30k miles for around $10k and this huge depreciation is a serious problem. Even after the tax credit that’s a $17k hit in 3 years. Nissan is offering $5,000 incentive to people to buy out their leases. Volt has the same problem.

            I suspect this is a “battery longevity/replacement cost fear” discount, or a discount because the marketplace sees the newer models as vastly superior, probably both.

            Are you bringing hybrids into the discussion because your argument is weak? Hybrids and plug in hybrids are a different discussion.

            I thought this was discussion of what we think the future might and should look like. I’m a little disappointed about your 110% $75k comment. Its an even greater deviation from the premise. Seems like a straw man and makes me wonder if attempting to flush out concepts with you is a waste of time.

            I thought this was a discussion of your completely hypothetical $20k 80% 150 mile car, and my soon to be not hypothetical $30k 110% 200 mile car, which should come first, and if the other should even come at all.

          • Bob_Wallace

            OK, let’s look at the map.

            A bit of a problem getting to Prince Edward Island. North Dakota, can’t go there. Same for Arkansas and SW Texas. Eastern Oregon and southern Nevada is a bit sketchy.

            Yep, you’re right. No need for chargers there. Just avoid those places.

            “Of those 100 I bet 95 will have that problem solved in under a year.”

            Oh, now you admit the system is not complete.

            Confusing.

            “Phones lose value not because they are cheap, they lose value because the next generation makes them obsolete.”

            But the next generation of EVs will not make the previous generation obsolete in that sense. Someone who is well served by a solid 100 mile range can easily continue to drive their ‘solid 100’ long past the day when the ‘solid 200’ EV comes on the market.

            Did I bring hybrids into the discussion? I don’t recall doing that.

            Will there soon be a 200 mile range car for $30k? None announced to date.

            When battery prices fall to around $150/kWh will it be possible to build a <$20k, 150 mile range EV? I think so. Why does that seem to threaten you?

          • TedKidd

            Hmmm, splitting hairs and cherry picking now? Show next year’s Tesla map.
            Never mind:
            http://www.teslamotors.com/supercharger
            http://supercharge.info/

            Everyone I know with cars coming off lease seem disinterested in buying the leases out. They are looking at the longer range cars coming. I would define that as obsolete.

            I thought you brought up the Ford Fusion.

            Tesla has targeted $35k, Chevy $37 (I believe). Both are 200 mile cars – haven’t you heard? If you have, since you always bring up the tax credit to support your position it looks hypocritical not to include it when it supports mine, don’t you think?

            I think selling electric cars is hard. Selling one that is inarguably deficient makes it that much harder. In fact I think it might be impossible to attract enough early majority for it to create the paradigm shift we need to move the masses. On the other hand, when you provide people with 110% of their needs there is no argument. No fear. No sacrifice. Early majority and late majority don’t like risk and they don’t like sacrifice.

            That’s my thinking.

            When battery prices fall to $150, why do you think a 150 mile/80% car offers better value to the market than a 200/110% mile car?
            Why does a 200 mile car threaten you?

          • Bob_Wallace

            Ted, I’m tired of playing games with you. You claim the Supercharger system finished and then you point out where isn’t yet finished.

            I talk about a hypothetical choice between a EV Fusions and a ICEV Fusion and you read in hybrid.

            I present an argument for a roughly $15k EV with one of the ways to keep down the price is to limit the range to about 150 miles and you get your bloomers all twisted because, I guess, feel you need 200 miles therefore everyone else should as well.

            A $15k EV probably wouldn’t have power windows and door locks either. That make it a “not attractive to me therefore not attractive to anyone” car?
            BTW, there is no tax rebate/subsidy built into my hypothetical $15k EV. Nor is anyone offering to sell a “110% EV” for $30k.

          • TedKidd

            Bob, I said “significantly complete”. You interpreted that as totally complete? Seriously?

            YOU are tired? Well I’m disappointed. I overestimated you. You twist my words, cherry pick, create straw man. Now you are making up cars that will likely never exist.

          • Bob_Wallace

            I did undervalue the “significantly” and I am tired. I’ve been dealing with an anti-renewable energy FUD spreader all morning.

            But, that out the way, let’s go to “significantly complete”.

            On the highest travel day of the year how many Teslas might you imagine would want a mid-day recharge? 10%, 5%, 1%, 0.1%?

            There are now 2,916 chargers/bays in the world. Let’s look at how many Teslas they could charge per day. At:

            10% = 29,160
            5% = 58, 320
            1% = 291,600
            0.1% = 2, 916,000.

            Tesla expects to be producing 500,000 EVs per year by 2020. That means that the current chargers would be over-demanded by a couple years later even at the very low 0.1% level.

            There are around 256,000,000 registered vehicles in the US. Assuming a time when about all are electric we’d need 2,560,000 rapid chargers it 1% of all vehicles took a long drive to Grandma’s house on Turkey Day.

            And totally built out? I’ve got two routes from here to San Francisco. I couldn’t make it either way with a Tesla S. There’s no Supercharger on my routes.

          • I see a good number of Model S owners complaining about gaps in the network, noting that they have to take a much longer route, etc. I agree that it is useful for most trips, but think Tesla will (and needs to) build it out much more — at least double what it is today, but even more than that I’d say.

            I looked at a trip up the East Coast, and it was disappointing to see that the Superchargers were not in the places I’d want them… which actually made them worse (in that regarding) than SAE/CHAdeMO chargers for parts of the route.

          • Sim

            The rich can afford to take a hit of depreciation. Brag about their environmental statement. If the costs of batteries drop as expected. It does not affect them as it is only a small part of their assests and mean while they can consider themselves as helping drive the industry and the perseved bragging rights.

            If there is a steep drop in prices of Lithion (whichever type) batteries, it will then drop less steeply as the uptake of EV’s will cause a blip in supply. At least that is the way I see it. We saw the same in solar panels dropping steeply then easing then dropping again.
            Batteries have the possiblility of really hitting the residential home supply. That could cause a problem with utitlities until the power consumption of EV’s rises enough to encourage utitlities to buy off solar residential to service EV’s increased consumption.
            I am building a new house. Therefore the cost of connection in the countryside pushes me to explore never going on Grid. Hoping the price drop of batteries starts to flows through by Dec.Jan. 10kwh, top inverter 20kah batteries( around Aus$40,000. Extra to rebates is the saving in never connecting to grid that is Aus$5000 or more if an extra pole is required. Not really viable financially but with a house and a flat is nearly feasible.
            Going off grid requires getting top of the line low power consumpton white goods. Gas stoves and a back up single induction plate to reduce gas consumption.
            Add an EV in 3 years may be a great way to go.
            A lot depends on if we end up with a further collapse in oil prices.
            The batteries are the game changer. Imagine what it was like between 1860s and 1900. Brand new industries coming out of nowhere. Telegraph, increased use of rail in the USA, steel, photography, moving pictures, electricity, oil, to name a few. American always thought in volume . Utitlites will just have to wear their ROI. Nobody thought of helping Cobb and Co. stage coaches Whaling ships, blacksmiths etc etc.
            Interesting times.
            Well made old EV cars will also be able to replace the batteries or upgrade if the price is cheap enough and the quality of the car is high enough like the Tesla.

          • Bob_Wallace

            “Going off grid requires getting top of the line low power consumpton white goods.”

            Not necessarily. I’m using a rather inexpensive 18 cu ft Kenmore refrigerator. It was cheaper to by a less than maximally efficient refer and upsize my panel array to match than to pay for ‘the very best’.

            (I found out that two other people I know who are also off grid had independently purchased the same refer.)

            Same with clothes washers. If one has control over their time schedule then wash on days when there’s lots of sunshine and you’ll likely be dumping power otherwise. Those are also the best days for solar drying (using the clothesline).

            Water isn’t an issue for me. What extra water an inexpensive top loader might need I pump up with solar on a sunny day and after I use it in the washer it goes back into the ground where I got it.

          • Sim

            Yes, you can go for the inexpensive models. I am in the position of buying all new goods. Therefore wish to take advantage of delayed start washing machine and dishwashers, and night and holiday mode refrigerator. etc.( Daytime only). I have to power 2 small places, a house and a granny flat.

        • peter904

          Bob W. I agree with you. However, I believe Tesla will follow the BMW model of appealing to more expensive, rather than mass market cars. the Tesla Model 3 will mirror the BMW 3 Series ($34-84K MSRP). While the Model 3 may have a $35K base MSRP, Tesla buyers will add $10-15K+ in options and accessories.
          I do see Leaf and Bolt emerging as lower cost options, provided that GM raise their 30K production level. They should do OK until the Chinese start importing their own BEVs probably with the help of a Korean company.

          • I really hope LG Chem is looking to boost production a ton. It has to see the demand coming in a much bigger wave within 5 years.

        • You’ve got the votes here. 😀

        • Jouni Valkonen

          I think that 200 dollars per kWh is cheap enough to replace all ICE cars and trucks if we can arrange good and affordable financing instruments that the levelized costs of battery can be distributed for the entire life span of battery.

          Oh wait, we are already at 200 dollars! Perhaps we should ask from Volkswagen why they are still producing ICE cars.

          • Bob_Wallace

            Over the last few years different organizations have worked up a price point at which EVs become cheaper than ICEVs. At the moment I have only this one on hand.

            The point adjusts with the price of oil. $200/kWh should do the trick.

      • na na

        apsley – how do you think they generate the electricity.

    • Bobby

      And Coal; storage means half our power plants could be idled as soon as sufficient storage comes on line. That is all of coal and a lot of natgas unneeded. No new clean sources required.

    • MorinMoss

      To be honest, I can’t believe those numbers will become real so quickly.
      But if you were to split the difference between Musk’s 30% target and this analyst’s 70% claim, that would be a staggering improvement and there wouldn’t be enough clean underwear in all the world for the oil companies’ execs, if this came to pass.

      • Bob_Wallace

        Here’s the quote –

        “I think we will probably do better than 30 percent cost reduction,” he said at the World Energy Innovation Forum at Tesla’s Fremont factory Wednesday. “We are making a humongous factory. There will be other companies besides us and Panasonic. So far it’s looking good. We’re building a gigafactory because we can’t think of any other way to scale.”

        http://www.mercurynews.com/business/ci_25761219/tesla-ceo-elon-musk-gigafactory-will-take-battery

        Elon is saying “better than 30%”.

        I’m not understanding the 70% number.

        There’s a frequently encountered belief that EV batteries now cost about $400/kWh, which may be accurate if one is looking at LG Chem or another non-Panasonic manufacturer. 70% off $400 would be $120/kWh, which is close to the Panasonic/Tesla target price if Navigant Research is correct.

        • Your latter reading makes sense. 70% seems wickedly optimistic to me. But I think it is worth emphasizing that Elon has stated *at least* 30% multiple times. This reduction is just based on obvious factors they think are guaranteed. How far beyond that he thinks is feasible (or will end up being feasible) through chemistry changes, etc., is anyone’s guess.

          Also worth noting is that they’ve started changing the battery chemistry a little bit, which is how they boosted the capacity to 90 kWh.

          • MorinMoss

            I don’t think chemistry changes, in the short term, say by 2020 will amount to more than a few %age points in lowering the cost.
            Most of the reduction will be economy & efficiency of scale, just-in-time inventory, and better logistics.

          • TedKidd

            Check this out – Straubel on how batteries evolve:

            https://youtu.be/4hNdbGjZfFU?t=28m27s

          • Have posted on that. Great talk. Love that guy. Keep sharing it. 😀

          • jeffhre

            True on, “Most of the reduction will be economy & efficiency of scale, just-in-time inventory, and better logistics.” IMO.

            Add newer chemistry though, and all of the above happens with fewer cells – a very virtuous cycle.

      • I think I’m in your boat.

    • Calamity_Jean

      “If these numbers turn out to be correct, it is all over for the oil industry.”

      Good riddance! I’m glad I sold the oil stocks I recently inherited.

  • vensonata

    Well, well, well. Now we are talking.

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