Report: Tesla says Model S will be profitable thanks to cheaper batteries

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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