Can the price of batteries be brought down far enough to build a $40,000 electric car? That's...


Can the price of batteries be brought down far enough to build a $40,000 electric car? That's the question that CNN Money, Barron's, and a host of others have posed to Tesla Motors (TSLA) and CEO Elon Musk, and needs to be answered before delving into Tesla's valuation. The automaker has indicated a mass-market vehicle with a range of 200 miles will hit the market in 2016 with a price point close to entries of Nissan and Toyota. Will it take a rocket scientist to pull off the engineering marvel?

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Comments (46)
  • Jason Tillberg
    , contributor
    Comments (1326) | Send Message
     
    Will happen. But will Tesla do it or some outfit in China?
    13 Jun 2013, 09:27 AM Reply Like
  • Julian Cox
    , contributor
    Comments (1255) | Send Message
     
    "needs to be answered before delving into Tesla's valuation"

     

    The integrity of this kind questioning needs to be called into question.

     

    One could equally state that before diving into Apple's valuation the question needs to be answered does Apple have the software engineering skills to release iOS7 in fall 2013.

     

    Answer: Yes. Otherwise why guide the market to a launch date.

     

    Elon Musk deals with the truth with scientific precision on a scale as follows:

     

    0. We know that a thing is true (already exists).

     

    1. I promise to deliver. (A thing can be done and will be done, any remaining obstacles guaranteed be met with sufficient resources to overcome them and all other outcomes rescinded to guarantee the object of the promise).

     

    2. It is guaranteed, or it will happen in the absence of force majeur.

     

    3. It can be achieved without the requirement for any miracles.

     

    4. It is reasonably likely to occur (usually with a percentage).

     

    5. There are many unknowns still to be resolved but I am confident that success is one of the possible outcomes.

     

    6. In the absence of a miracle I am not confident that success is a possible outcome

     

    The Tesla Gen III delivered on a 2016/2017 timescale falls in the range of truths 1 to 3.

     

    That is the answer from the same CEO that delivered Model S on a promised schedule and docked a space ship with the International Space Station.

     

    Unless the author (Barrons for example) is accusing Musk of changing track to become a bare faced liar, what possible value could exists in questioning the likelihood of a suitable battery being available when you already know the answer. No wonder Musk ended the Barrons interview with the phrase: You don't understand the business.
    13 Jun 2013, 10:50 AM Reply Like
  • ying778
    , contributor
    Comments (69) | Send Message
     
    To add to Julian's points - keep in mind that battery tech is an area that a lot of companies are investing in. Tesla is not alone, and will benefit from both technology advancements and economies of scale. In fact, the EV ecosystems win, everyone using large battery packs win.

     

    Tesla doesn't have to prove anything to analysts. Many consumers believe; the longs believe; we are waiting patiently.
    13 Jun 2013, 10:59 AM Reply Like
  • David G.
    , contributor
    Comments (203) | Send Message
     
    The battery question has already been answered. They are being produced far cheaper than most people realize:

     

    http://bit.ly/12jtZpP
    13 Jun 2013, 11:47 AM Reply Like
  • JackB125
    , contributor
    Comments (417) | Send Message
     
    I would also add that if anyone has multi-source proprietary information about upcoming battery technology (held under confidential disclosure agreements), it would be Elon Musk. When he gives GEN III guidance information, he's doing it with information nobody on Wall Street is privy to. And, he likes to beat his own guidance.
    14 Jun 2013, 12:10 PM Reply Like
  • Esekla
    , contributor
    Comments (4445) | Send Message
     
    And what will the characteristics of those batteries be? For mass market, they need to get not only cheaper, but better. Both are possible, and neither has much to do with Tesla's current valuation; the short squeeze

     

    http://seekingalpha.co...

     

    is not quite over yet as I've documented in the comments there, but it would need a heck of an announcement on June 20 to keep it going.
    13 Jun 2013, 09:35 AM Reply Like
  • chfp
    , contributor
    Comments (719) | Send Message
     
    Better than what? Tesla's battery pack is among the best in the world. If you're referring to the 8-yr warranty, that's the extent of the financial commitment by Tesla. There's nothing to say that the packs will go poof immediately thereafter. In fact battery experts know that the packs can often last twice as long as the warranty. In Tesla's case, since the cells have active thermal management, they could easily go 15-20 yrs before losing significant capacity.
    13 Jun 2013, 10:46 AM Reply Like
  • Esekla
    , contributor
    Comments (4445) | Send Message
     
    better than the current setup, which I agree is best in class.
    13 Jun 2013, 11:07 AM Reply Like
  • techwonk
    , contributor
    Comments (288) | Send Message
     
    $3000 per year in gasoline x 8 years= $24,000 savings.

     

    http://aol.it/12y3Cg4

     

    That makes it the equivalent of a $16,000 car. Even if the price was raised 25% it would be competitive on that basis, with the right financing.

     

    Would like to see more focus put on the total costs of ownership for example from customers with solar installations for home chargers, and maintenance costs.
    15 Jun 2013, 04:10 PM Reply Like
  • Esekla
    , contributor
    Comments (4445) | Send Message
     
    Wow, math like this, which assumes that the value of a dollar is fixed, is the best reason to stay away from this stock altogether. The combination of recent big money interest and gullible retail investors makes it a potential death trap for shorts, but if enough of them can't be reeled in to keep the squeeze going, then you're looking at double digit declines while waiting for Tesla to execute and try to catch up to its current valuation. In 8 years, I expect my dollars will buy roughly half of what they would now.
    17 Jun 2013, 12:29 PM Reply Like
  • joenjensen
    , contributor
    Comments (701) | Send Message
     
    It seems you people will always find some excuse why the Model S or any Tesla auto won't make it because of this or that, now it's the batteries.
    Well the batteries NOW will take you 280 miles on a single charge, then you can drive (the car will tell you) to a supercharger and charge up FREE in 5 minutes, i.e. free mileage....what more can you want?
    13 Jun 2013, 09:44 AM Reply Like
  • wigit5
    , contributor
    Comments (4365) | Send Message
     
    joen that battery also is in an 80,000$ vehicle that the general population can't afford.

     

    This thread isnt about the model S making it... this thread is about the cost of batteries coming down. Stop trying to derail discussions that investors should be considering even Elon Musk doesn't know for sure there will be a positive outcome (although he is betting on it).
    13 Jun 2013, 09:47 AM Reply Like
  • bbor55
    , contributor
    Comments (154) | Send Message
     
    5 minute fill up huh? Interesting, never heard that anywhere else.
    13 Jun 2013, 10:03 AM Reply Like
  • wigit5
    , contributor
    Comments (4365) | Send Message
     
    They say in 30 minutes you get like 70-80% of a full charge so 5 minutes must be 100% charge...
    13 Jun 2013, 10:10 AM Reply Like
  • Esekla
    , contributor
    Comments (4445) | Send Message
     
    Thank you! I see no reason to take my comments negatively. I've already acknowledged that battery improvement is quite possible, and that, with the recent market hack of raising capital into a short squeeze, Tesla has made it for at least another model, probably much longer. Furthermore, I wrote in Tesla's Matrix Moment, that the company "has built an all-electric car about as well as can currently be done."

     

    http://seekingalpha.co...

     

    At current stock prices, the only meaningful discussion of Tesla fundamentals is several years out. Model S sales really don't matter any more, so perhaps Tesla can be excused for ceasing to report them. As I argue in the article, investors need to weigh the increases in electricity prices that mass adoption would bring against alternative fuels, not gasoline and legacy cars.

     

    Many will respond to that by trumpeting climate change, but even Tesla models electricity produced by natural gas, and when you factor in transmission and battery leakage it's not clear you have a win against alternative fuels from a climate perspective.
    13 Jun 2013, 10:21 AM Reply Like
  • joenjensen
    , contributor
    Comments (701) | Send Message
     
    You guys need to tune in on June 20th Elon is going to have a live demo to convince the doubters that it can be done NOW to fill the batteries in 5 minutes.
    The only ones that are trying to derail this thread is the shorters who are loaning some short stock for $7.50 and not putting their money where their mouth is, i.e. break down and buy it.
    13 Jun 2013, 11:06 AM Reply Like
  • wigit5
    , contributor
    Comments (4365) | Send Message
     
    I'm actually long tsla, but a full 280 miles on 5 minute charge? If that was available why spend the millions of dollars building out a supercharging network that it takes 30 minutes to get less than full charge?

     

    seems ludicrous doesn't it?
    13 Jun 2013, 11:15 AM Reply Like
  • AlexiaEP
    , contributor
    Comments (1074) | Send Message
     
    So, wigit5, you're calling Mr. Musk a liar? He tweeted that the Model S could be charged faster than one can fill an ICE car with fuel and that will be demonstrated in a week's time.

     

    I know what seems ludicrous to me.
    13 Jun 2013, 11:43 AM Reply Like
  • wigit5
    , contributor
    Comments (4365) | Send Message
     
    I didn't realize he said that but then that begs the question doesn't it? Why spend millions on "superchargers" that take 30 minutes when they have access to charging tech that only takes 5 minutes?

     

    Wonder if they'll call the 5 minute charges "Ludicrous chargers" or maybe just say "we have gone plaid with charging speeds"
    13 Jun 2013, 11:48 AM Reply Like
  • David G.
    , contributor
    Comments (203) | Send Message
     
    It depends...my theory is that it is an energy dense supercapacitor that charges the battery pack (or eliminates the battery pack). Supercapacitors can take charge very, very quickly. Far more quickly than a battery.

     

    And if this is where he is going with it....then it is gamchanger for any land vehicle. Truck, Motorcycle, bike, etc...the market opens exponentially.

     

    So you run on over the supercharger, fill up the supercapacitor (s) in 5 minutes, and that either runs the vehicle alone or charges the battery as you drive.

     

    Just my theory...but that's what always interested Elon Musk. And he just seems like a guy who follows his interests to the end point.
    13 Jun 2013, 11:55 AM Reply Like
  • wigit5
    , contributor
    Comments (4365) | Send Message
     
    So for the record Musk has promised to charge a model S 80kwh battery to full in under 5 minutes in a weeks time? That is what the 20ths announcement is him debuting this new charging 'method/capacitor'?

     

    In theory anyway?
    13 Jun 2013, 12:08 PM Reply Like
  • ajmcgold
    , contributor
    Comments (96) | Send Message
     
    It will be a live demonstration.
    14 Jun 2013, 08:16 AM Reply Like
  • valschaf
    , contributor
    Comments (11) | Send Message
     
    Excellent analysis of this question here: http://bit.ly/12jtZpP
    13 Jun 2013, 09:51 AM Reply Like
  • 123man
    , contributor
    Comments (1612) | Send Message
     
    In three years the resale Model S's will hit the market with 5 year warrantied battery left and at a price point many will be able to afford - which translates into more Model S new car sales - so 3 years down the road we'll have new Model S sales, Model S re-buys, Model S resales, Model X sales, Gen III sales AND an existing infrastructure to provide convenience for ALL of them at super charging points throughout the US - I'de say the genie is out of the bottle - in the mid 90's Ovshinsky produced a battery that carried a car over 200 miles, GM bought it up and sold it to Chevron etal, who promptly shoved it into a bottle - it is still there -
    so Elon built a new bottle and the cap is off - THAT is the discussion on batteries - it is not if, it is when, and when is around the corner - I can hear the shorts crying, NO NO, not that -
    13 Jun 2013, 10:07 AM Reply Like
  • otiswild
    , contributor
    Comments (40) | Send Message
     
    http://bit.ly/12jtZpP

     

    Tesla may be paying on the order of $200/kWh for batteries now, and that could be cut in half by the time the Gen3 comes out. They buy massive quantities of standard cells, and can optimize for more energy because the sheer number of cells per battery provides enough power. ~8k cells per vehicle, ~24k vehicles per year. That's a lot of cells!
    13 Jun 2013, 10:33 AM Reply Like
  • theSIPguy
    , contributor
    Comments (3) | Send Message
     
    I don't think there is a predictable market for $40,000 non-petroleum based fuel cars. After all, burning fossil fuels doesn't threaten our very existence, and people are unlikely to continue purchasing vehicles that save them money within this thriving economy. As a nation, we have much more to gain by pouring billions of dollars into....space travel. Subsidize battery technology, not petroleum companies.
    Stupid Humans!
    13 Jun 2013, 10:33 AM Reply Like
  • Ken G.
    , contributor
    Comments (16) | Send Message
     
    Can batteries can made cheaper and better? Absolutely and they are on the horizon... We know from previous Seeking alpha articles that Tesla is involved in developing a Metal Air battery capable of 1000 mi range (http://seekingalpha.co...). Add in the news that these batteries can be made much cheaper (http://bit.ly/11yd6le) and an 18 year-old kid has developed a super capacitor that can charge faster batteries much, much faster (http://bit.ly/11yd64T). Yes, big breakthroughs are on the horizon.
    13 Jun 2013, 10:33 AM Reply Like
  • pat1000
    , contributor
    Comments (496) | Send Message
     
    Fuels Celled Cars-----That is the problem for electric cars if one believes Toyota who states they will be selling fuel-celled cars in 2015-----

     

    It surprises me none of these bears on Tesla ever has a word to say about fuel-celled cars since it looks like Toyota is going in that direction rather than battery operated cars-----
    13 Jun 2013, 10:34 AM Reply Like
  • dennisg13
    , contributor
    Comments (129) | Send Message
     
    In order to move a car using a fuel cell you have to use some power source to get the hydrogen from the chemical decomposition of water. Electricity? Why use the electricity to break the water and then use the hydrogen to power a car when you can just use that electricity to power the car?
    13 Jun 2013, 10:47 AM Reply Like
  • chickensevil
    , contributor
    Comments (743) | Send Message
     
    Bleh, please, if you see anyone supporting fuel cells go educate them on the subject. Two major issues:

     

    They are decidedly NOT clean.... at least not with how we are producing hydrogen en-mass. Hydrogen is currently made through burning off natural gas. Can it be obtained through other... cleaner... sources? Yes. But that is not how we are getting it right now. So it is a false "green"

     

    They are super dangerous. To get hydrogen to stay in a liquid state you must either super cool it, or compress it... or both... They are currently compressing the tanks at around 700 atmospheres, that is, 700 times normal atmospheric pressure. What this means if the tank ruptures it will turn into gas instantly and expand to 700 times its current volume. Hydrogen being the most volatile gas will also explode very easily as well. With the rapid expansion and very likely explosion happening at the same time, you will quite literally set the air on fire in about a 1 block radius.
    13 Jun 2013, 10:58 AM Reply Like
  • Esekla
    , contributor
    Comments (4445) | Send Message
     
    Agree! Even though I've said you have to evaluate Tesla's future against alternative fuels, I basically discounted hydrogen as one of the alternatives in Tesla's Matrix Moment. Unless some miracle advance for synthesizing hydrogen comes along, it doesn't look like much of an option, and synthesizing hydrogen is proving to be every bit as intractable a problem as truly efficient battery storage.
    13 Jun 2013, 11:15 AM Reply Like
  • pat1000
    , contributor
    Comments (496) | Send Message
     
    Dennis ET AL
    Honda has just started selling fuel-celled cars in Italy which has built around 70 Hydrogen stations from the south of Italy to the North of Italy in order to refuel these cars----
    In the past I also know Elon has referred these cars as "fool celled" cars but for the first time there has been major progress in bringing these cars to market by many car makers----
    13 Jun 2013, 11:16 AM Reply Like
  • dennisg13
    , contributor
    Comments (129) | Send Message
     
    Fair enough, but do you want to drive around with that kind of bomb on board? As a science teacher I regularly blow up balloons filled with hydrogen for my students. I just looked and can't find it, but on youtube there is a video of a teacher blowing up a fairly big balloon outside at his school. It is amazing and quite spectacular. Now imagine that many, many times greater as large volumes of H is compressed or liquified in some tank in your car. Frightening.
    13 Jun 2013, 11:28 AM Reply Like
  • Vico Confino
    , contributor
    Comments (249) | Send Message
     
    Vico Confino
    Wake up Mr. Equity Manager.
    The engineering marvel of the century has already been pulled off.
    You don't have to be rich to own a Tesla ( I know). Stop trying to buy a Ferrari for the price of a KIA.
    Wipe the cobwebs from your eyes, the future is here and you naysayers are all complaining about being deprived of owning a Tesla S sedan.
    You will never own one by spending your time writing nonsense for a penny a word.
    Yes, I am 80 and have already forgotten more about life than you will ever know.
    I find it unbelievable how far the work ethic has fallen and is continuing to fall in the USA.
    Don't like what I have to say. Simple answer. Don't read it!
    I guarantee that killing the messenger will not solve your problems.
    At long last, an exceptional auto, made in America by a genius born in South Africa and assembled by workers of all races and colors.
    Worry about paying for the new Obamacare health plan and the devastating rate of inflation that is on the horizon for starters.
    Have a great day. I am off to enjoy my Tesla S sedan.
    Vico Confino

     

    Google: Vico Confino presidential
    13 Jun 2013, 10:48 AM Reply Like
  • chfp
    , contributor
    Comments (719) | Send Message
     
    2 obvious ways to bring down battery prices:

     

    1) Sheer volume pricing. This is akin to clubbing the price with a blunt instrument. But hey it's proven and works.

     

    2) Technological advancements. Double the energy density of the battery and savings can be realized through weight reduction, reduced wiring, simpler cell management etc.

     

    pat1000: Fuel cells are a distraction. They're essentially fancy (more expensive) batteries. They don't create energy, they store it, just like any other battery. I wouldn't be surprised if it's 10+ yrs before an economically competitive fuel cell might hit the market. By then, lithium air batteries could beat fuel cell capacities.
    13 Jun 2013, 10:50 AM Reply Like
  • Senlac
    , contributor
    Comments (93) | Send Message
     
    Batteries are only going to get better, and I'm sure this is not lost on Elon Musk, and why he is investing in charging infrustructure. As the capacity increases, and charging time decreases, the new technologies will made range anxiety a distant memory.

     

    Below are two types of solutions, Zinc Air and Lithium using Graphene Silcon Nanoaparticle structure. If these don't come through, I'm sure something else will come along. The need for better batteries is far to great to remain unsolved for long.

     

    Full cells are a bad idea. Efficiencies will never be very good, because there needs to be a conversion of some type from a carbon source of fuel. Or use Natural Gas or something like it.

     

    SiNode Systems
    http://sinodesystems.com

     

    Zinc Air batteries.
    http://bit.ly/14yUkQ8
    13 Jun 2013, 11:21 AM Reply Like
  • David G.
    , contributor
    Comments (203) | Send Message
     
    The question has already been answered. Battery cost has declined lower than what Barrons thinks it is at:

     

    http://bit.ly/12jtZpP
    13 Jun 2013, 11:46 AM Reply Like
  • Senlac
    , contributor
    Comments (93) | Send Message
     
    Indeed, thanks. The fact Tesla is using a common battery size, same used to devices like laptops, means any significant improvements in battery technology will most likely target that market, and be immediately available to Tesla. Elon Musk has worked this out nicely, go Tesla!
    13 Jun 2013, 12:23 PM Reply Like
  • Jonas Weil
    , contributor
    Comments (15) | Send Message
     
    The Supercharger footprint will fill the gap (extend the range) until
    the battery is developed, tested and manufactured. A previous comment was on target--divert money from oil and natural gas
    subsidy to battery development! Work backward from the solution rather than "naysaying" forward about the problem. Someday, there will be an "electric car" lobby. Don't bet now against Mr. Musk.
    13 Jun 2013, 12:17 PM Reply Like
  • Cassina Tarsia
    , contributor
    Comments (662) | Send Message
     
    Batteries coming down? Of course! Didn't they say the same thing about computers? And maybe the high definition wide-screen TVs not so long ago ... Is anyone using a cell phone today? Even the rockets are getting cheaper, thanks to Elon Musk. Where did I hear that name before? Maybe he has something to do with Tesla ... you think? Well ... maybe some of what he has been saying should be listened to ... most everything that everyone said couldn't be done he has already either done or is in the process of doing. Yes, battery prices will be coming down now that there is a need and there is a great deal of research and development in this area. Anyone ever hear of the aluminum-air battery ... in Israel it is already able to go 1,000 miles ... and Tesla has four patents on this new technology.
    13 Jun 2013, 12:21 PM Reply Like
  • speedofov
    , contributor
    Comments (91) | Send Message
     
    The cost of petrol goes up over time. The cost of batteries goes down. Nevertheless, if you were in a horrific crash, would you prefer to be sitting (or laying) on 20 gallons of probably leaking petrol or a large battery with no evidence of danger?
    13 Jun 2013, 12:26 PM Reply Like
  • John Bingham
    , contributor
    Comments (1282) | Send Message
     
    Almost certainly the event on the 20th will be a battery swap demonstration.

     

    In 2009 Dan Neil (Wall Street Journal) bet Elon that he couldn't stick to his promises about the timeline, the safety, and the cost of the Model S. The final part of the bet, and the only part not yet fulfilled, is that the Model S must have the capability for fast swapping the battery.

     

    The loser pays his wager to Médecins Sans Frontières. For Dan that is $1000. Apparently Elon said he would pay $1 million!

     

    There may be more to see on the 20th but one thing I do know: Elon plays to win.
    13 Jun 2013, 06:39 PM Reply Like
  • Esekla
    , contributor
    Comments (4445) | Send Message
     
    Hmm, I was under the strong impression that current Model S vehicles do not have a fast swappable battery pack. If I were a current owner (completely not feasible for a city-dweller without a garage) and this turns out to be true then I'd feel pretty betrayed for being an early adopter. I don't think it matters for the stock, though. If the announcement only has to do with charging time, and doesn't extend beyond the Model S in some way then it's essentially immaterial since TSLA has currently priced in Gen III success.
    13 Jun 2013, 07:50 PM Reply Like
  • Bob W
    , contributor
    Comments (128) | Send Message
     
    GM owns part of a battery development company called Envia Systems.

     

    On their web site Envia claims that their battery stores 400 Wh/kg which is almost double Tesla's 240 Wh/kg battery. They state 91% capacity retention after 300 charge cycles, which is good.

     

    And they state a price of $125/kWh which is incredibly cheap. EV batteries might be down to $300/kWh now, but that's only a "might".

     

    Apparently GM is running the batteries in test vehicles at the moment.

     

    On Wednesday this week at the annual conference of Canada’s Automotive Parts Manufacturers’ Association, GM’s head of global R&D let his guard down slightly in saying prototype electric cars now being evaluated on U.S. test tracks have triple the energy density of a Chevrolet Volt, and close to double that of a Tesla Model S.

     

    A Volt has about 140 watt-hours per kilogram energy density in its LG Chem lithium-ion T-shaped battery pack. Tesla’s “skateboard” chassis now uses Panasonic cells that reportedly deliver as much as 240 Wh/kg, and Tesla CEO Elon Musk said to expect more.

     

    And so has GM in so many words.

     

    “Today there are prototypes out there with 400 Watt-hours per kilogram,” said Dr. J. Gary Smyth, executive director of Global Research and Development, General Motors Company.

     

    Smyth added the mystery batteries will cost much less than batteries in today’s electric cars and they’ll have a “big impact” on the auto industry and “it completely changes the equation” on cost, range, and vehicle packaging.

     

    http://bit.ly/11ZR2zU.../

     

    Could be scuttlebutt. Could be that the world of cars is about to change.
    14 Jun 2013, 02:35 AM Reply Like
  • 123man
    , contributor
    Comments (1612) | Send Message
     
    I couldn't care less if Tesla comes out with battery swapping - they have already come out with preparation for 200+ super charging stations across the US, and that good enough for me and my 2.3 long trips per year - otherwise my garage filling station works well enough - 4 weeks, 2300 miles, no gas, plus the feeling Luke Skywalker had when flying those little speedos around avoiding all those Hummer like vehicles - by the way, the new movie "Where have all the Hummers gone" is playing out right now - somewhere -
    14 Jun 2013, 10:33 AM Reply Like
  • 123man
    , contributor
    Comments (1612) | Send Message
     
    If the battery swap becomes a reality and a Model S owner with an 85Kw with 300 mile range could swap for say a 500 or 1000 mile range battery, then that would be something special - early adopters get the benefit of new technology - wait until Thursday PM -
    18 Jun 2013, 09:54 AM Reply Like
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