By Octave Duclos
Tesla has pushed the boundaries of electric vehicles ever since the original roadster, released in 2008. While companies like VW and General Motors have plans to offer many compelling alternatives to Tesla’s vehicles, the Elon Musk-led firm intends to keep pushing the frontier of electric vehicles, with ambitious plans to be its own supplier of batteries, integrating the whole battery supply chain from mining to car.
Tesla’s Battery Cell:
Tesla plans to produce its own cells that are more powerful and easier to manufacture. Tesla currently uses cylindrical cells 21mm in diameter and 70mm in height bought from third party battery suppliers, but the company’s own cells will be significantly larger, at over 4 times the volume, and should deliver a number of performance benefits, such as more range, faster charging times, and higher cycle life. To achieve such improvements, Tesla intends to re-invent almost all processes necessary to produce a battery. A few of these innovations include mining lithium from Nevada clay ores using table salt, developing a tab-less battery, creating a dry coating electrode, using a new silicon coating for its anode, and creating a new cathode with no cobalt. Through many such incremental improvements in battery design and manufacturing, Tesla hopes to make batteries that are 56% cheaper, have 54% more range, and require factories that are 69% less expensive to build, to be produced at large scale in 2-3 years.
Tesla’s Plan :
Tesla’s battery day shows that the firm is willing to take the steps necessary to address battery supply, which is currently the main constraint for the electrification of vehicles. Tesla has claimed that its battery supply is not keeping up with product demand, and other car manufacturers have sometimes had to delay or reduce the volume of their electric car offerings due to lacking battery supply. By improving manufacturing efficiency, sourcing its own Lithium, and implementing a battery recycling program, Tesla intends to produce 3TWh per year of its own batteries by 2030, which is almost 40 times the current battery production rate coming out of Gigafactory Nevada. A 3TWh per year production rate would be enough to produce 40 million Long Range Model 3s a year, although Tesla intends to use its batteries in other products such as the Semi-Truck, Powerwall and a new smaller model that should start at just $25,000.
Effect on product lines:
Cheaper and better batteries lead to better electric car offerings for the consumer. Given that the current Tesla Model 3 Long Range battery costs about $10,000, if Tesla executes on their plan and passes its savings on to the consumer, we could see a Long Range Model 3 with over 495 miles of range and a purchase price of $41,400 within the next 3 years. Such an offering would be a serious challenge to all internal combustion engine (ICE) competitors, especially considering the lower cost of ownership of electric cars due to cheaper fuel and maintenance. It would also push competitors to offer even better specs for their own electric cars.
Tesla’s battery day is good news for all EV enthusiasts. It lays out a clear path towards a complete transition from ICE vehicles to electric vehicles by tackling both the constraints on the supply side (sourcing and creating its own batteries) and the constraints on the demand side (reducing EV sticker price and providing range comparable to ICE vehicles). Battery day also provides a blueprint for how other battery and EV makers can ramp up the manufacturing of batteries at lower cost, which would further accelerate the electrification revolution. Indeed, even Tesla emphasized that work and innovation are required from all parties involved with batteries in order to accommodate the world’s growing energy storage needs.