Tesla Tire Costs 10× Battery Cost, & My Plan To Deflate Tire Costs 90%
When I saw Tesla’s Battery Day, I was impressed with both the breadth and the depth of the plan they presented. It covered all the parts of the battery, but also how the battery is placed in the car. The one question it raised was: “Did they put their considerable engineering talent into solving the right problem?”
I think the answer is yes, but due to my work on focusing on the total cost of ownership of the electric vehicles, I knew Tesla was missing a huge opportunity by not spending any engineering effort on tires. Most of the talk on tires is either on improving efficiency or on improving performance, but for 90% of the world, the big issue is the cost of the tires. In this article, I’ll explain the size of the problem and propose 3 solutions to the problem.
I estimate the cost of per kWh of the battery pack to be about $158 today, and if we assume Tesla achieves its stated 56% cost reduction goal, the company will be able to produce a pack at about $69 a kWh. For a small 50kWh pack used for a robotaxi, this would be $3,450 and it would likely use lithium-iron-phosphate batteries for their long cycle life (let’s just call that a million-mile battery). So, for use in a robotaxi where it will go a million miles, the cost of the battery per mile is $3,450 divided by 1,000,000, or 0.345 cents a mile, much less than a penny a mile.
If you just replace the tires on your Model 3 with the tires it came with, tires costs are a significantly larger cost than the battery over the life of the vehicle. The Tesla Model 3 Standard Range Plus (SR+) comes with Michelin Primacy MXM4 tires that have a treadwear rating of 500, a traction rating of A, and a temperature rating of A (500AA). You should get around 40,000 miles out of those tires, with a cost on Simpletire of $276. Add on local installation and a road hazard warranty and it comes to about $1,358 for 4 tires. $1,358 divided by 40,000 is about 3.4 cents a mile, or about 10 times as much as battery costs! Over a million miles, 24 tire changes would be needed and that would add up to $32,592! Holy cow — why are we worried about battery costs when tires costs are projected to be so much larger?
Maybe because battery cost is a cost that hits you at purchase time, whereas tire costs hit you down the line. It could also be that we are obsessed with working on the differences between electric cars and gasoline cars. However, the customer doesn’t care where cost savings come from, they just want lower costs.
One thing I’ve learned from 30 years of performance tuning software: you can only save time and resources where they are used. It sounds simple, but many times people make assumptions (like Tesla did with Battery Day that the problem is in the cost of making the battery, when the far larger issue is in the cost of the tires).
Step 1 — Shop around
The first step can be done by consumers without any help from Tesla. Simpletire’s highest-rated tire for the Tesla Model 3 with 18 inch wheels is the South Korean made Lexani LXUHP-207, with the same 500AA rating for $83 a tire. Adding installation and road hazard coverage for 4 tires comes to $470. (If we took off the road hazard coverage, we could get to $420, which is a very popular number with Tesla fans.) $470 divided by 40,000 miles is about 1.2 cents a mile, for a 65% savings.
Step 2 — Use a smaller wheel size
Twenty-five years ago, I saw a tire ad for some tires with a 30,000-mile warranty advertised for $12.99 a tire. I drove to the Sear’s store that was advertising the tires and said I wanted the $12.99 tire. They replied, “That is the price for the tire for the 12-inch wheel, the cost for your vehicle will be about $30 or $40 a tire.” I said I drive a Toyota Tercel with 12-inch wheels and that 12-inch tire will work perfectly for my car. They were shocked. I don’t think they had ever sold the $12.99 tires. I drove out of the store having spent less than $50 for 2 tires, mounted and balanced!
Now, Tesla would have to design the brakes to be smaller so we could use a 17-inch wheel with a higher aspect ratio. This won’t be appropriate for most personal vehicles because the handling won’t be as good and the looks of the car will suffer, but it would be great for a robotaxi for 3 reasons.
- Lower cost
- Better resistant to potholes
- Smoother ride
The cost of the Canadian built tire is reduced from $470 to $364 by this change, but since the lower performance tire has a harder compound, it is warranted for 50% more miles. So, the cost per mile of $364 divided by 60,000 miles is $0.006 a mile, or 50% less than the Lexani. We are now up from a 65% savings to a 82% savings!
Retreaded Tires
The trucking industry has been using retreated tires for over 50 years to save money and natural resources. According to tirerecappers.com, regarding the advantages of retreads:
“First, it keeps your waste down, and ensures that your tires aren’t being thrown onto the heap along with thousands of others in dumps and landfills across the country. Second, getting a retread tire is significantly less expensive than buying a brand new tire, as they’re more cost effective to make, and use significantly fewer materials.”
The retreading giant Bandag was one of the first stocks my father purchased for me as a child. (I no longer own the stock.) It was a big winner in the 1970s. According to Bandag’s Environmental Sustainability Page:
“More than 800 tires per hour are retreaded with Bandag. In a year, this helps keep roughly seven million tires out of the waste stream.
“Bandag retreads require just 30% of the energy to produce as a new tire.
“Making a Bandag retread takes only seven gallons of oil, compared to 22 gallons required to manufacture a new tire.
“Several Bandag franchisees are taking advantage of alternative energy such as solar power.
“Bandag FuelTech products offer some of the lowest rolling resistance in the industry, which contributes to fuel efficiency gains, ensuring that the environmental benefits of our retreads extend well beyond the production line.”
Bandag was very successful at expanding its sales and increasing its profits, and for good reason, it saves industrial users 50% to 70% of the cost of new tires without lowering quality. If we can adapt retread technology to lower costs by 50%, that would cut the cost per mile from 0.6 cents a mile to 0.3 cents a mile. Since this won’t reduce installation expenses, let’s assume a 43% reduction to 0.34 cents a mile. This would give us a whopping 90% cost reduction from the original 3.4 cents a mile!
Conclusion
I hope this article spurs a discussion in the land of tires and helps Tesla and its owners achieve about $29,000 in savings over a million miles versus the $4,400 detailed in Tesla’s Battery Day presentation. That is over 6.5 times the savings. There will be some engineering required, but considering the massive cost savings, it is surely worth the effort.
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