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Battery Developments Coming Thick And Fast For Tesla

Dec. 11, 2019 2:47 PM ETTesla, Inc. (TSLA)402 Comments
Nick Cox profile picture
Nick Cox


  • Energy storage will significantly increase in importance for the company in the next few years.
  • Battery cell manufacture and increased battery joint ventures coming to the fore.
  • Australia and California continuing to be fertile ground for the company's energy storage business.
  • Tesla riding the renewables macro trend on the back of its battery developments.
  • News from Battery Investor Day likely to give further positive drive to the Tesla stock price.

Tesla (NASDAQ:TSLA) will be unveiling exciting new battery and energy storage developments in the next few months. This comes on the back of a need to meet rising demand for its auto and energy storage products. Recent further orders from Australia, Europe, and the USA reinforce the urgency of this. Commercial projects, utilities requirements, and residential use all point to huge pent-up demand.

Its position as the leading EV manufacturer in the world will be followed by a position as a leading player in energy storage and battery development. In autos, Tesla leads the dialogue in the transition from ICE vehicles to EVs. It is likely to play a similarly pivotal role for batteries and energy storage even if it is not the largest player.

Battery Developments for Tesla

Technical developments will stem primarily from Tesla's purchase of Hibar Systems and Maxwell Technologies (MXWL). It is expected that the Maxwell purchase will allow for a 20% cost reduction and an increase in cell density from 250 Wh/kg to 500 Wh/kg over a phased period. Maxwell has innovative "dry electrode" technology which has the added advantage of significantly reducing the CO2 level. Batteries are, of course, the leading cost for Tesla's products. Battery cost reductions will be hugely significant for the company's competitiveness and gross profit margins.

Hibar has been specialising in high efficiency lithium-ion manufacturing systems to improve the speed of production of battery cells. They have been working with Canadian academics on the goal of a "million-mile battery". Some of the work being done on this can be seen here. A million-mile battery for autos would equate to a 20-year battery for stationary storage. They have facilities in Europe and around Asia in China, South Korea, Japan, and Malaysia.

Announcements concerning cell manufacture are likely to be made at

This article was written by

Nick Cox profile picture
Nick Cox is a long-time entrepreneur and investor,currently living in Singapore.He has lived and worked in the Asia-Pacifci region for many years.He is a graduate in modern history and economics from University College,London University. His investment strategy is centred around finding long-term growth companies in the region based on inspiring Management and businesses at the cutting edge of new growth areas. Asia is the leading driver of worldwide economic growth today and for the medium term.

Analyst’s Disclosure: I am/we are long TSLA, BYDDF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (402)

"Tesla secured its largest project in Europe last month with a contract with Slovenian company NGEW. This is for a 12.6MW/22MWh storage project worth EUR14 million (US$15.4 million)"

Can somebody please explain to me how a 12.6MW Project can produce 22MWh, did somebody finally found the "perpetuum mobile" (a machine that puts out more energy, then you put in). That would solve all energy problems :-).

Storage is a function of Volt * Ampere Hours (or Wh since Volt * Ampere equals Watt). In other words out of an 12.6MW storage Project you can never get 22MWh, if you can it would be a 22MW project :-).

The writer throws numbers around without much understanding but then again that seems to be pretty normal for all those Tesla/Elon fanboys on SA.

And don't get me started on, that we run out of usable lithium (unless they really come up with something completely new, did not happen for the last 20 years they are trying) long before any of those fanboy numbers for electric mobility and or storage come to fruition :-).
22MWh means the energy storage capacity. 12.6MW is the power output.
A battery can be discharged at whatever power output is determined by cell or other design limits.

Generally, batteries are rated as 1C discharge over an hour. Over the hour, the battery's energy is fully discharged into the load.
That is, a 22MWh battery discharged at 22MW, would be a '1C' or '1 hour discharge battery'.
12.6MW (~0.6C) is less powerful, extending discharge time to 22/12.6 hours = 1 hr 45 mins.

The battery is intended to provide power for line frequency and voltage stability, which is generally applied for a few minutes, rather then storing energy to power loads during a blackout, for example.

However, like many Lithium-ion batteries, Tesla's batteries can't tolerate high power output unless there are a large number of cells to help share the load, and so larger than necessary capacity.
@Wildsau If you are on a 110volt line and your are drawing 5 amperes for 1 hour you just used 550 watts.
Apple Dan profile picture
@Nick Cox
@Seeking Alpha
"Such cost reductions would bring the Powerwall up from 13.5 MWh to 24 MWh at the same price. This would enable a consumer to pay off the product within 7 years rather than 13 years (at average utilities rates)."
Are articles on SA completely un-edited? If gross errors (e.g. 1000-fold) are identified, are they not corrected? This kind of error significantly reduces confidence in the statement made and in SA generally.
@Apple Dan

What error?
It would be helpful if you would show the math, or show anything to make your case rather than just mouth off.
Nick Cox profile picture
Sorry you don't understand the maths, not sure I can help you there.
If improved battery performance gets you from 13.5 kWh to 24 kWh at the same price point, and with added advantage of using night over day time charges which Powerwall gives you, then as an example, in California,payback time would reduce from 13.7 years to about 6 years.Plus all the other advantages that battery storage gives you.
If you've got a slid rule you can probably figure out the variations...
Apple Dan profile picture
@Nick Cox
The article formerly discussed a powerwall of 13.5MWh to 24MWh instead of 13.5kwh to 24kwh (i.e. off by an order of 3 magnitudes), but it appears that this was edited out. Do you not recall this Nick? In this repsect, my "mouthing off" apparently had the desired effect.

Thanks for jumping in @zwalderon. Your contribution was invaluable.
There have been rumors of Panasonic taking what they have learned at GF1 back to Japan. This article adds some credibility to that. seekingalpha.com/...
Apple Dan profile picture
@Nick Cox
Hi Nick. Sorry, I was confused by your units. You cited a 13.5 Mwh Powerwall, but my understanding was the the capcity was 13.5kwh as per the following.
This is currently selling at 73,333 yen/kwh, or about $666/kwh. You cited the need to reach $100/kwh, which, I agree, would be an attractive level to purchase. However, the current price appears to be 6.66x larger than that desired price.
My apologies if I have misunderstood, but I would be grateful for some clarification on the units you are using.
solucky profile picture
@ Apple Dan

" This is currently selling at 73,333 yen/kwh, or about $666/kwh. "

Its pretty easy math.

Estimated cell price today 170$ sold for 666 $ without any profit.
Cost for the consumer 9-10K complete installed !!!

So if Tesla reduce the cell price 70$ the cost for the consumer drop from 10K to 9K not such an great improovement.

And with yearly electricity cost of 750 EUR you need arround 25-30 years untill i got back the investment from an Powerwall ...an pretty stupid investment !!!
Davewmart profile picture

'....an pretty stupid investment !!!'

Custom made for their target market!
Yes, if we continue with existing paradigm of pricing carbon @ 0. But increasingly countries across the world are putting a price on carbon.

As usual, excellent work!

Regarding risk, trade protectionism and unforeseen new technology are external factors Tesla has little control over. The internal management risk of managing their portfolio would not deter me from investing, either. They've executed well thus far in the face of numerous barriers - "successfully".

Finally, their last risk, working capital is about to subside significantly, provided energy storage produces working capital and capex cash. With those healthy gross margins from energy storage in Australia, they may just burst into a free cash flow producer overnight - wh/ will produce a lallapalooza effect.

Again, excellent work, I read your work every month!

BYD, long.
TSLA, no position, as of yet, but with free cash flow they'd be hard to pass on.
Nick Cox profile picture
Thanks yours.
You are probably right about the working capital situation being the last major risk to their continuing rise in profitability and stock performance.It seems their capital requirement picture has improved substantially though I am not sure I'd go as far as you in saying it is "about to subside significantly".Certainly though the constant Tesla FUD's comments about stock dilution and imminent huge capital raises have proved false....again.
SxWerks profile picture
Renewables cannot replace fossil fuels without storage.
Grid storage batteries are highly effective for grid stability and peak shaving
Longer term storage source balancing and seasonal shifting new technologies must be developed and deployed.
All summed up in this Stanford Lecture:
SxWerks profile picture
Why Tesla’s cylindrical cell battery packs are so efficient:
Smaller size make power output and input transfer faster
Cylinders provide structural support
Cylinders are smaller so thinner battery packs allow more space for vehicle
Cylinders allow better thermal management by providing greater surface area
OTA software updates allow operating firmware upgrades to current users.

My M3 now has more power and can charge up to 200 kw/hr. Acceleration is faster than any car I’ve ever known. Sensor array now recognizes many more vehicles more accurately.

These are just a few key points that OEMs still haven’t caught up with. If Tesla achieves 500w/kg density, it’s game over.
>M3 now has more power and can charge up to 200 kw/hr<
For less than 10 minutes, and only when the initial state of charge is nearly zero. Employees perhaps place bets to see how long a Model 3 will drive around Hawthorne during the dead of night to discharge the battery.

>Acceleration is faster than any car I’ve ever known<
• Tesla have twice been successfully sued by Norwegian owners for over-stating horsepower.
• Tesla cap range, charging rate and capacity after sale.
• Their batteries catch fire.
• Battery warranties are not honoured
• Range is decimated by cold weather.

The fanboy, willing to ignore all deceptions, and pay for them, is Tesla's 'technical advantage'.

Manufacturers with a reputation, profit margins and discerning buyers, don't have that luxury, nor do they need to chase range for ever-reducing returns, just to keep the fanboys convinced of the promises they sold to themselves.

ICE manufacturers are not intending to replace ICE and hybrids with BEVs, so can save themselves the costs and embarrassment of chasing their own tails.
jsantmyer profile picture
How can this be?

The bears say the company is close to bankruptcy as their Model 3 continues to increase losses. We all know the bear rallying cry- "7 in September". That one has been promoted by the ignorant for the last 3-5 years or so.

It makes the bears feel warm and fuzzy when they are united against the evil empire of Elon Musk by coming up with moronic little tag lines that promote misinformation, that by the way, they actually believe. The bears have been beaten down by the master, so this is all they have left in their arsenal of conspiracy theories and their outright ignorance as to what is actually happening on the ground.

There is no doubt that the energy division will become very important to Tesla's future both economically and technically and politically as the visionary Musk continues to communicate for anyone that has the intellect to actually listen. That of course, rules out the bears.

Go Tesla!
Nick Cox profile picture
The language of the bears here is getting more and more extraordinary.
I don't bother to engage anymore with people getting abusive and saying Musk is a crook a charlatan etc etc.
I guess they are getting more abusive as their arguments get shown to be less and less persuasive and as the stock price keeps rising.
@Nick Cox ......I guess they are getting more abusive as their arguments get shown to be less and less persuasive and as the stock price keeps rising.****** It's always interesting, the Tesla Glee Club. They get so chirpy and confident when the stock starts to spike. The silence then becomes deafening after the next inevitable cratering.
Nick Cox profile picture
Being a cutting edge high tech company the Tesla stock price will remain volatile.However since its IPO is has risen over 2000%.
Like Apple,it is just a Buy & Hold for large scale capital appreciation.The industries being disrupted by Tesla can cause short term downward blips in the stock price by stock manipulation and false rumours, but the upward trend will remain strong.
I find people often confuse battery back up for short term and long term use. Battery backup can be modestly successful backing up solar and wind when the wind doesn't blow just right or the sun doesn't shine optimally for minutes or hours at a time.

But batteries do a horrible job backing up solar and wind when the wind doesn't blow and the sun doesn't shine for days or weeks at a time.
watchingfromabove profile picture

"But batteries do a horrible job backing up solar and wind when the wind doesn't blow and the sun doesn't shine for days or weeks at a time."

I follow and generally agree with your point but it also depends upon how a battery is defined, the technology, and costs.

Li-Ion batteries are pretty expensive for long term electricity storage but they do actually work. Lead acid also works. A "battery" of pumped hydro lakes actually works pretty well. And a "battery" of fuel cells works very well for some of the attributes.

So the issue is a multi variable problem of cost, space, safety, storage capacity, longevity of storage, round trip efficiency, easy controlability, speed of dispatch, dependability, and a host of other engineering issues.

Generally Li-Ion is a pretty expensive technology for longer term energy storage which is the downside for it. It's superior for speed of dispatch for example.

So while I agree with your point, most real world engineering problems are typically full of trade offs with no single technology having all the desirable attributes. With the problem you are describing, the attributes would be cheap, smaller size, bulk storage of large amounts of energy, capable of fast dispatch with good round trip efficiency, and holding their capacity over a longer period of time (on the order of a couple of weeks with as much time as months). We don't have any technology that fits all of those today so the quest continues.

About the best storage today that fits most of the attributes is pumped hydro but it doesn't fit the "smaller size" requirement as it typically requires lots of land. The scale has to be pretty large also to be "cheap" per kWh. Hydrogen also works but it isn't cheap or very round trip efficient and has some safety issues.
Why build and prioritize solar and wind, try and back it up with batteries, when you will also have to back it up with probably a gas plant? then you will probably need to spend on extra power lines, all over the place, connecting everything. If you just started with nuclear or the gas plant, and stop there, most grids would be much better off. You can usually put a gas plant exactly where needed, ie; optimize its location. societies are spending insane extra moneys stupidly, and if their goal is to reduce C02, they aren't even doing that.
Nick Cox profile picture
Renewables are already starting to be more competitive than gas peaker plants which will become increasingly obsolete and represent a future high loss liability to those who build them.
this article constantly suggests that Tesla has already been successful with batteries, but the financials don't prove this fact.
South Australia recently put in the largest battery farm in the world, constantly bragged about by the “green” crowd. But they never tell you that this battery holds only enough electricity for 30,000 small homes and for only 3 hours, at its theoretical most efficient use. What about if the sun doesn’t shine or the wind doesn’t blow for more than 3 hours? Disaster!

To back up enough electricity for one week, it would cost about $168,000 per home to build a battery like they did in South Australia. That doesn’t even include the cost to produce the electricity. Many of those South Australian homes probably cost less than $168,000 to build the entire home. This isn’t back up; it is virtual signaling.
watchingfromabove profile picture

" What about if the sun doesn’t shine or the wind doesn’t blow for more than 3 hours? Disaster!"

That wasn't it's target use so that's wrong. In the case you describe, NG plants can be brought on line for those time frames. Which is why the battery is described as very successful (at its intended usage).

"To back up enough electricity for one week, it would cost about $168,000 per home to build a battery like they did in South Australia."

Which is why it isn't targeted to solve that problem. It is working great for its intended use which is why it is being expanded. Your described use is a strawman and the battery was not intended for that use.
It's far from the biggest battery.
100MW is the sum of a 30MW battery, and a 70MW battery. The latter can operate for around 10 minutes.

This site shows the operation of Australia's four grid batteries.
Capacity factors are fractional.

The Australian Bureau of Statistics offers this information:
Table O12: "Australian electricity supplied from utility-scale battery storage"
...........2017...2018 (GWh)

42.8GWh is ~0.016% of national demand.

Despite the many colourful claims, there are only four batteries, dating from proposals circa 2015/2016
1) Hornsdale, SA (129MWh/100MW) Commissioned December 2017
2) Dalrymple North Battery, SA (8MWh/30MW) Commissioned June 2018.
3) Ballarat BESS, Victoria (30MWh/30MW) Commissioned October 2018.
4) Gannawarra ESS, Victoria (50MWh/25MW) Commissioned June 2019.
>Your described use is a strawman and the battery was not intended for that use.<
It was sold as a back-up battery, and widely reported as such by the media. Only later was its use by Neoen revealed.
You didn't know of it, either, but honesty is not the green zealot's strong suit.
Jons Thoughts profile picture
My own calculation of storage needs by 2040 is much higher than that quoted by bloomberg. Assuming that by year 2040 California has gone totally renewable and 40% is from wind, 40% is solar, i expect a need of 600 GWh of storage. This would be for California alone, worldwide i would expect the need to be one or two orders of magnitude greater.
Assuming that California is 100% renewable in 2040 is the same as assuming that California population declines by 50% by 2040 due to exorbitant power costs and incessant blackouts/brownouts.
Nick Cox profile picture
Options Only,
Countries around the world are going renewable faster than even the more optimistic of us had expected.California will be an example of this I suspect as at the same time the rest of the USA disgracefully pulls out of climate accords and backs its fossil fuel polluting industries.
Does Tesla now have the new solid state batteries that don't explode into flames? That change will (about one in 1,700 cars) change the probability that there would be ssue of spontaneous combustion and cascading fire with Tesla batteries. With that high probability,.and for a $65,000 car, it is completely unacceptable. Solid state batteries are are great safety step in the right direction. (Toyota and Panasonic developed the technology.)
@Lewis Bagwell

"explode into flames
"about one in 1,700 cars"

Sounds official.
Source and link please.
@Lewis Bagwell ......(Toyota and Panasonic developed the technology.)**** and it remains on the shelf.
Nick Cox profile picture
Lewis Bagwell,
As I have pointed out before,the incidence of fires in petrol driven cars is higher than in EV's.
Very good article. I agree that Battery day should be very interesting. They have already let it slip that batteries will be built at Terawatt hour scale.

"skeptics" are still stuck on the "what about the 420?"
Nick Cox profile picture
Vikram Angrish,
Thanks yours.
is it know exactly (or roughly) when the upcomming battery and drivetrain investor day will be?

Sorry I can't be more precise, but all I've heard is sometime first quarter.
Feb 2020
OK, plug this in to your mental map, and then re-read the article:

New nuclear power plant design will begin testing in 4 years. It will be approved and proliferate globally at a very rapid rate – cheap to construct, super-safe to operate, and low-cost operation.

Cost of generating electricity will decrease rapidly. Carbon-free, too. Nuclear waste? That will be burned when sodium reactors come on-line, in about 10 years. Sodium reactors are also safe and cheap to build.

Batteries are a commodity. There are a lot of very smart, very well-funded, people working on improving battery technology. Will Tesla be first with breakthrough innovations? Maybe, but probably not. Tesla researchers are in a lab that is one of 100 labs all working toward the same goal. I have no information that the Tesla researchers are any smarter than people in the other 99 labs….

With nuclear coming on-line, that will disrupt large solar arrays and wind, and in turn disrupt the need for battery capacity to store solar/wind energy. Nuclear will be on-line, 24/7/365. Batteries will be limited pretty much to cars, and other product-specific uses.
Presbyopic profile picture

You might be right about nuclear will be the predominant power source and that batteries will be limited to cars and product-specific uses. You could also be wrong. Nothing has been done with nuclear in a long time, and I haven't seen any evidence that will change much over the next ten years.

As for researchers at Tesla being any better/smarter than the other 99 labs?

Well, a large number of MIT graduates, Stanford graduates, Ivy League graduates in engineering were poled to find out which company they were most interested in working for when they graduate, and the answer was Tesla...almost unanimously.

The new guard of engineers see Tesla as the most innovative company in the world. That says a lot about the talent and drive these engineers will bring to Tesla. They're interested in changing the world, and that's exactly what Tesla is doing.
SimonR2 profile picture
@Everyone Loves Oil Not Me so a bunch of people not even working yet want to work at Tesla. In other words meaningless.
Nick Cox profile picture
Ah the old nuclear pipe-dream.
Huge cost over-runs...huge public opposition (for instance Japan and Germany)......people getting killed or their health greatly harmed....problems with waste.
I don't see too many countries going down that rocky road.
I wouldn't get to excited. I think it will be long on hype, short on details, and even shorter and when and how things will be produced. More grand standing for what I am now convinced is going to be a capital raise in Q1 2020. Not sure why they would need one since allegedly they have $5 Billion in cash on hand, but I have a feeling their financial outlook is not nearly as rosy as they make it appear.
Presbyopic profile picture

You are 100% guessing, close your eyes and throw the dart and hope it hits.

Tesla may not meet its timelines -- who cares -- but they are doing everything they said they were going to do.

This is a one step at a time process; build the cars, make money, create momentum, move on to the next project; be it the Roadster, the semi, the solar shingles, etc.

They can't all do it at once. It's not economically feasible. But they can tackle one goal at a time, reach that goal, then move onto the next one as the accomplished goal continues to generate revenue and keep the company moving forward.
SimonR2 profile picture
@Everyone Loves Oil Not Me
Everything they said they would do? Are you actually serious?
Where is the battery swap station for Model S then please?
Where is the free sueprcharging for all?
Where is that self plugging in supercharger that was promised for 2017 (gone a bit quite there).
No need for more capital raises ($10.5B ago)
Profitable not just every quarter going forward but ‘this quarter’ which was already 1/3 done and they lost $700M in.
I guess you conveniently forget all of the misses.
@SimonR2 "I guess you conveniently forget all of the misses."

You know, sometimes good ideas don't pan out...and sometimes they're ahead of their time. I wouldn't be so quick to make fun of people who've done stellar innovation to date.
The storage battery is, in my opinion, a catchpenny, a sensation, a mechanism for swindling the public by stock companies. The storage battery is one of those peculiar things which appeals to the imagination, and no more perfect thing could be desired by stock swindlers than that very selfsame thing. … Just as soon as a man gets working on the secondary battery it brings out his latent capacity for lying. ~ John Goodenough
we've fallen behind China in energy storage installations while a republican president hell bent on digging coal was in charge. do not forget this.
... And you'd think that president would jump at the opportunity to fund a "Power Wall".
@MaxPower912 ...... while a republican president hell bent on digging coal was in charge. do not forget this.****** Maybe Trump should be like Xi Jinping and dictate that companies dig coal!?
Nick Cox profile picture
Despite Trump's support I believe something like 9 major coal companies have gone bust in the USA this year.Even with executive support, coal's a hopeless proposal in the modern world.
Legacy Legends, LLC profile picture
Buy before $420/share.
@Legacy Legends, LLC better get your $420 bid in while you can!
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