• Dec 30th 2010 at 5:56PM
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Tesla Model S – Click above for high-res image gallery

It's not exactly a surprise that battery costs for electric vehicles will go down over time, but the big question is by how much and how fast. Tesla Motors, which uses small lithium-ion cells similar to the kind found in laptop computers, believes that lithion ion pack costs will be low enough to make the $57,000 Model S profitable even though it'll likely sell in smaller numbers than all-electric competitors like the Nissan Leaf.

That's what Tesla's chief technology officer J.B. Straubel told Bloomberg, adding that Nissan has, "a cost challenge that will be more difficult to solve. It will require a lot higher volume before they really get to a cost point that is internally sustainable." Nissan, of course, paints a different picture because it has been developing li-ion technology for almost two decades, but there you have it.

Nissan's annual sales target for the Leaf, once full production gets going, is in the hundred-thousands, while Tesla hopes to sell around 20,000 units of the Model S a year. The big difference is in the price per kilowatt hour (kWh). Tesla co-founder Martin Eberhard told Bloomberg recently that he thinks Tesla's battery packs might cost just $200 per kWH, while the large-format cells in the Leaf (and most other plug-in vehicles) could cost around $700 or $800 per kWh. Nissan has previously said the Leaf pack costs just under $750 per kWh.

[Source: Bloomberg]


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  • 42 Comments
      • 4 Years Ago
      I hope that the savings in battery pack will also translate to a more moderate price - particularly here in Australia where car ownership is relatively expensive.

      I would love to make the Model S my next car if the price is right.

      I am still waiting for the Sydney dealership to emerge - it was said back in May 2010 that one was on its way here to Australia - and there is appears no discussion / news release confirming exact location or opening date.

      Here is a post I started about it:

      http://www.teslamotorsclub.com/showthread.php/4261-Tesla-dealership-in-Sydney-Australia

      http://www.teslamotors.com/australia
      • 4 Years Ago
      Nissan has a problem if it believes that expensive city cars sell hundreds of thousands / year. Tesla Model S will sell a lot more because it has got the basics right, better range, better looks, better price/quality ratio.

      Also those that diss the decision to use laptop batteries, it is just much cheaper that way, once large car batteries get cheaper/kWh Tesla will use them. Their basic design is made for future with battery pack as one component, it can pretty much use what kind of battery pack they want, they are not restricted to one design. It will however take quite a long time before other battery types are anywhere near laptop battery prices.

      The so called "added complexity" is just matter of manufacturing and stacking those cells in the modules and adding them to pack. That can be made completely automatic, so it isn't really any more complex than other battery types. It also has an advantage that they can swap from one battery chemistry to other one without designing the manufacturing process over again. Just use different same form factor batteries.
        • 4 Years Ago
        It is matter of customer base, not capability of building cars. If it were Nissan that were building Model S, and Tesla building Leaf, you would have me saying same thing for Tesla.

        I don't live in US and I would not buy city car like Leaf here. In US I would probably own two cars, and there Leaf would actually make sense, here I have space only for one. Leaf doesn't cut it. City cars are not enough for Europeans, 100mile range city EV:s have a small customer base. Very small. It won't sell lot.

        I bet many of those that buy it in the heat of the "new EV" greenes, will find the annoyance of needing to start looking a recharge-point when you start your journey too annoying fast, and will sell their cars ASAP for reasonably priced ICE car.

        The fact even that 95% of all driving is made less than 100 miles it doesn't help if 90% of drivers do drive longer than that 5% of time. 5% is every 20th trip to somewhere. It is enough to have need for doing that trip once a month to make Leaf impractical.

        To make ICE car obsolete you need to have a range that makes *car* impractical for longer trips. Model S 300 miles is close to borderline that so it can compete in that market, with future 600 mile battery packs for sure, and that 250-300 miles is enough to make renting a ICE for even longer journeys practical. 100 miles is nowhere close enough.
        • 4 Years Ago
        If you are not US based then the economics of electric vehicles are far better.
        Your own situation does not provide an adequate template for the market for EV's, with limited range but much cheaper than the Tesla.
        Many families have more than one car, and the demographic for those second car users is larger than for those who can afford exotics like the Tesla.
        You are also discounting electric vehicle manufacturers providing hire facilities for occasional use of ICE cars.

        As for the economics, the Zoe I calculate when bought at Renault's projected price and the battery hired as they intend would be more economic in the UK if you do more than around 6,000 miles a year.
        Fuel prices will continue to rise, I believe, and so even this figure is likely out of date - I will recalculate when the latest price rises work through.
        This ignores the London congestion charge.
        So it would appear to me that the market for EV's in many countries in Europe is likely to be just fine, whilst the market for expensive exotics like the Tesla is likely to be as limited as it has always been.
        • 4 Years Ago
        Yeah, the specs of the Model S vapour-ware are wonderful!
        OTOH you can now buy a Leaf, or at least order one, for far less than a Tesla.
        The supposed cost advantage of the commodity 18650 batteries can hardly continue if the Nissan's and Leafs sell in any good volume, as the 10 million kwh that AESC will be able to build by 2012 will dwarf the rest of the market.

        Thinking that the Nissan's and Renaults will not catch on is surely biased towards a US perspective, as the economics and practicalities of electric cars are far better elsewhere.
      • 4 Years Ago
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      • 4 Years Ago
      The former CEO of Shell Oil predicts gasoline at $5 a gallon by 2012. Is that wildly aggressive? The American Automobile Association predicts the same price by around 2014 to 2016.

      Cheaper batteries will help, but ultimately expensive oil will guarantee that electrics will be profitable. Woe to the carmaker who doesn't offer an electric option when gas hits $5.
        • 4 Years Ago
        I'm saying that people still drive happily here with that high gas prices, it doesn't affect anything, so I don't see how it could affect US, unless there are some other ties with big oil than just general public driving cars. Like hurting other parts of your government by helping oil industry when it would be in reality unnecessary.
        • 4 Years Ago
        $5/gallon is still cheap. In here gasoline costs 1.5EUR/liter which translates to $7.57/gallon."

        Cheap..for YOU. In EUROPE.

        It is NOT cheap for the United States, The United States in not in or near Europe. Our economy had some major problems when gas kicked $4 and we're barely in a state of recovery. $5 gas would have some major, major ramifications for the US. We don't have the same kind of layout or dependence on mass transit that European countries have. And yes, any company without a major EV program to fall back on might not survive this tie around.
        • 4 Years Ago
        $5/gallon is still cheap. In here gasoline costs 1.5EUR/liter which translates to $7.57/gallon. That is current price, not some future prediction, and still people drive happily with gas-guzzlers. US gasoline price is cheap.
      • 4 Years Ago
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      • 4 Years Ago
      The word cheap in the title is a bit misleading: They're not putting cheaper quality batteries in, Tesla's technology is just more cost-effective at the moment. The question is, with large-format cell production booming in the coming years, will Tesla's strategy remain viable in the long haul?
        • 4 Years Ago
        Paul: "Even if large battery manufacturers manage to eventually undercut that price Tesla's vehicles will still be compelling from a design & features standpoint."

        I would have said, if large formate batteries become cheaper, it would be a relatively minor model update to start using different batteries.
        • 4 Years Ago
        If they can produce battery packs at $200 per kWH Tesla is better positioned to produce viable EVs than any other manufacturer. Even if large battery manufacturers manage to eventually undercut that price Tesla's vehicles will still be compelling from a design & features standpoint. Their cars are expensive, but I don't see any other companies able to beat them in price, performance & range for in the next 4 years. Tesla just has to execute on their production plans in order to succeed.

        Full disclosure: I do not own stock in Tesla.
      • 4 Years Ago
      Tesla needs a more complicated pack (6,831 lithium ion cells ) , packing, cooling etc and space issues ,Maintenance, reliability issues etc part of it.

      The money they save in cells will be lost in packing and maintenance.

      The large format cells once more automakers uses (ex: GM, Hyundai, Ford, Nissan etc ), they will be cheap - note the point that most automakers are going to LG chem and this itself will reduce the cost because we need only sum total on large format consumption to cross a point to make it cheap.

      Lets wait and see :-)
        • 4 Years Ago
        It is mass-market sedan, but it does not compete in same city car class as Leaf
        • 4 Years Ago
        This is not -repeat- NOT a mass market sedan competing with the leaf.
        • 4 Years Ago
        @SamT. I agree with you. However, the Nissan Infinity EV will arrive more or less at the same time as ModelS but I believe Tesla will have a more compelling luxury vehicle:

        1) Design -- Nissan's vehicles are either weird (Juke, Leaf) or boring (Santra, all Infinities). The Model S's Aston-Martin-meet-Maserati design is more upscale and refined.

        2) Range -- If Nissan sticks to the 100-miles battery pack for the Sedan, Model-S will have better range. I wonder how much the 300-miles version will cost.

        3) Profit Margin -- Nissan has more Infinity dealers for luxury sedans, but they need a fat profit margin (at least comparable to what they get with Mercedes, Audi & BMW). With Tesla stores there's no middle men to pay off and Tesla can keep all the money for itself. That's on top of the presumed cheaper batteries.

        • 4 Years Ago
        The expense of more cells is minimal since they are assembled into modules and the liquid cooling and large number of small cells actually increases reliability and maintenance advantages, not the other way around. Liquid cooling/heating protects cell life and function by a much more tightly controlled pack environment. One cell failure in Tesla's massively parallel pack has almost zero effect on the entire packs function. A single cell failure in the Leaf requires a costly (not to mention long loss of the car) dealership visit. A single cell failure in the Tesla results in an automatic isolation of it, and no perceivable loss in range or performance to the user. It will take many hundreds of Tesla cell failures before you'll notice anything and consider a maintenance visit.

        That all said, Nissan appears to have beaten Tesla to the market with a mass market sedan (if they actually start delivering the promised hundreds of thousands of cars) and Tesla may will pay a huge, possibly fatal price for that.
      • 4 Years Ago
      Interesting. Nissan claims in 2010 to have gotten their pack prices down to around $470 kWh by using their long years of development and using a relatively bare bones pack management system. In 2009 Patil claimed that GM had gotten their pack prices down to around $600 kWh including an elaborate pack management system. Now Straubel claims that he can get the S pack in near $200 a kWh in 2012 and he also claims Nissan is at $750 now. Dang, I am getting a case of whiplash trying to keep track of where these prices are projected to be.
      I think Nissan pays around $500 a kWh for a pack with basic pack management, GM pays $600 per kWh for a pack with a rather robust management system and that Tesla has a pack that costs less than Nissan but has even less pack management. And I think all 3 will improve their pack management systems while reducing the price. But how fast will they do so?

      http://www.businessweek.com/news/201...-update1-.html
        • 4 Years Ago
        Tesla has better battery management than Nissan. A lot better in thermal management especially.
        • 4 Years Ago
        I thought Tesla had the most robust pack management system. Your link is broken, so I can't check your source, but does it actually say that "Tesla has a pack that costs less than Nissan but has even less pack management." Everything that I can find says that Tesla has a much more robust battery management system than Nissan.
      • 4 Years Ago
      Nissan is saying bluntly that no-one outside know what their costs are, or their future battery plans and costs:

      'Assuming the new Congress doesn't roll it back, that federal tax credit is available to the first 200,000 EV customers of each carmaker; when it runs out, Nissan expects to be selling so many Leafs that economies of scale will bring costs down. Ghosn says the company needs to sell between 500,000 and 1 million Leafs a year in order to enjoy those economies. "Then we'll be able to compete without any government subsidies. Our battery costs are already coming way, way down. Everybody in the business has estimates, but nobody really knows everything we're up to. The Leaf is going to be one of the most profitable products Nissan has ever made."

      http://www.businessweek.com/magazine/content/11_02/b4210048400234.htm

      From their cost targets for overall price reduction in the car it sounds to me as though they must be targeting perhaps $300 kwh at the most, as that would put the 24 kwh battery at $7,200 in a car which they are hoping to keep down to the present price after subsidy, ie around $26k

      Another point I had not known is that they will have the capacity once their new factories are built to rapidly ramp up to 1 million EV's a year.
        • 4 Years Ago
        @Fernando:
        And more models to come from Nissan, for instance their van-based model.
        In some countries in Europe, notably France, they are also eligible for a subsidy, although commercial vehicles are not in the UK.
        The economics of these and practicalities are very good in Europe, where many of the delivery routes are short in heavy city traffic, and savings on pollution most vital.

        Many analysts expect at least a temporary spike in oil prices in 2012:
        http://earlywarn.blogspot.com/2010/12/deutsche-bank-125-oil-spike-in-2012.html

        Many would argue that this is the start of a permanently high price for oil, broken only by depressions reducing demand due to the high prices.
        I would argue that even prices in the $130-150/barrel range will not subdue demand in the likes of China enough to cause a sustained fall.

        From the POV of optimising production of EV's and Nissan/Renault's efforts in particular this could hardly be better timed, as they will be reaching serious production levels precisely in 2012.
        • 4 Years Ago
        They have to sell between 500,000 and 1 million electric cars in order to enjoy those economies, but not only Leafs, i think they include also Fluence, Twizy, Kangoo and Super-Zoe in those numbers.
      • 4 Years Ago
      So . . . are they planning to use the same Li-Cobalt batteries? So they'll have the same storage capacity drops after 3 to 5 years, the same short warranty, the same 'thermal runaway' issues (although they do have the best battery management system to prevent it & deal with it), etc.
        • 4 Years Ago
        The thermal runaway issue was due to manufacturers skimping on the separator weight to minimize laptop weight as opposed to a specific chemistry issue. If someone shorts out any battery chemistry it will produce a lot of heat and possibly explode. Based on what I've read some chemistries are nicer in that higher internal resistance allow the energy to be dissipated over a longer time period if there's an internal short, but since the batteries are isolated and thermally protected an internal short shouldn't be a problem even if it happens, unlike a sealed laptop battery where the heat from one internal short can set off the rest of the pack.
        • 4 Years Ago
        In an interview Elon mentioned they use stock cells for the Roadster, but will use a highly modified version of the Panasonic cells for the Model S better suited for automotive application

        http://www.youtube.com/watch?v=9cfHGDoniU0

        • 4 Years Ago
        roflwaffle: thermal runaway is not about exploding batteries (that may happen to any battery pack). Thermal runaway is caused by negative thermal coefficient of the cell current, so that you can get a hot spot in a perfectly normal battery pack that starts conducting more current and gets even hotter. That's a major issue and there are only two solutions to it - use a bit more conservative design (not the laptop stuff designed purely for energy density) and assure that the whole pack is as uniform (both chemically and structurally - for heat distribution) as possible.

        Either way, using plenty of laptop batteries that were not designed for automotive applications is asking for problems. OTOH, modifying the chemistry/design of these batteries is not much different (economically) from designing a large format cells.

        A likely scenario is that Tesla simply can't get large format cells. They don't have enough "mass" to negotiate a good price point of a newly developed product. I wouldn't be surprised if Tesla switched to them once some larger EV manufacturers drive their prices down.
        • 4 Years Ago
        Thermal runaway is the politically correct version of 'exploding laptops'. The laptops don't really explode . . . they burn-up. Just kinda violently and people like to exaggerate.

        I think they've modified lap-top batteries so it won't happen as much. That said, the laptop batteries still probably have relatively short life-spans. So I think Tesla has to switch chemistries. And if you switch chemistries then you are no longer in the same market . . . is it then worth sticking with the same (and bad for cars) battery form-factor?

        I think Tesla will use the same stuff as everyone else eventually. They just used the 18650s since there was nothing else available at the time. Tesla was truly the pioneer and a Pioneer often has to deal with less-than-ideal materials.
      • 4 Years Ago
      It's the same old nonsense based on a very poor article in the Wall Street Journal being endlessly repeated.
      What appears to have happened is that Perry confirmed that the battery in the Leaf would cost less than $18k, perhaps just by saying 'yes' when asked if it would.
      This is then recycled as the 'cost' of the Nissan battery at $750kwh, when all we actually know is that it is less than this.
      We also don't know what the time point referred to is, as Perry could have been confirming that the current cost is less than $750, but that does not rule out it dropping fast.
      In short, no-one outside of Nissan and AESC knows how much it currently costs, and how fast they expect it to drop.
      • 4 Years Ago
      Timo:

      US gas might appear cheap for you. But here in the US $4.00 gasoline will cripple many working people. As will $5 and $6 gas/gallon. Fortunately the US leads the world in producing low-zero emission highway rated vehicles. $5 gas will help a whole lot of Americans elect to buy PHEVs over the next decade. Which is good for the whole world.
        • 4 Years Ago
        'Fortunately the US leads the world in producing low-zero emission highway rated vehicles. '

        !! I don't know how you come up with that!
        The average fuel economy of the US fleet sucks in comparison to others, and their more efficient models are based on designs the US manufacturer's developed in their European operations.
        The European leaders in fuel economy though are Fiat, not any of the Americans.

        Toyota, which last I heard is a Japanese company ;-) , has for years produced the most advanced hybrid, and now the pure electric vehicle effort is spearheaded by Nissan and Renault, whose massive effort in relation to the size of the country clearly puts France at the front.
        Government and quasi Government organisations alone are ordering 50,000, which equates to around 250-300,000 if adjusted to the size of the US population.

        The centre of battery production remains in the Far East, and the small start ups in the US backed by a few hundred million of Government money in no way compares to the enterprise of AESC, Toshiba, LG and so on, not to mention the Chinese.

        'The Renault-Nissan alliance has now spent more than 4 billion euros ($5.2 billion) developing EVs and batteries, according to the company. '

        http://www.businessweek.com/magazine/content/11_02/b4210048400234_page_2.htm

        The French Government has also spent several billion.

        The US effort consists of relatively small start ups such as 123, the GM Volt and branches of overseas companies whose main centre of gravity remains elsewhere.
        • 4 Years Ago
        @David Martin.

        You are correct - the the only fair way to look is relative to the country ie. per capita.

        That means for me in Australia we are possibly doing the least per capita.

        Our government is doing close to nothing just a few inquiries here and there and bit of field testing and most of this is at the state level not the federal level.

        There is one test being carried out in the state of Victoria however I cannot be part of it because I don't live in that state. This is probably the biggest thing to date:

        http://www.theage.com.au/victoria/melbourne-becomes-testing-ground-for-electric-vehicles-20100805-11krz.html

        Domestically the only EV you can buy right now or between at least 2012 is from Blade Electric Vehicles which are a converted Hyundai Getz.

        http://bev.com.au/

        Otherwise there is some work being done by Eday Life:

        In the video in the following link Robert Lane also admits Australia is doing little.

        http://green.autoblog.com/2010/11/30/australian-designed-chinese-built-eday-electric-hatch-to-be-pri/

        Tesla Motors as I posted earlier are to bring a dealership here in Sydney but that is still to materise - I do remain confident however that it will emerge eventually.

        Overall, it is a very disappointing - we do have the Greens party with balance of power in our parliament Senate come July 2011 and a voice in the minority government so I hoping some more change at the Federal level will come soon.
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