Special Feature: Tesla promises $25,000 EV in 3 years, -56% battery KWh price reduction
September 22, 2020
We’re pleased to bring our subscribers a special Power Materials report on Tesla’s Battery Day event, which took place September 22 in California. If you’re seeing Power Materials for the first time, please hit the button below for a free trial.
Tesla plans to more than halve the cost of electric vehicle batteries with a slate of technological and process improvements, ultimately yielding a $25,000 electric, autonomous car in three years, Power Materials learned from the company’s Battery Day presentation September 22.
Vertical integration and re-thinking of nearly every facet of battery and vehicle production was necessary to produce those projected savings, said CEO Elon Musk and senior vice president of powertrain and energy engineering Drew Baglino.
“Obviously, we need to make more affordable cars,” Musk said. “I think one of the things that troubles me the most is we don’t yet have a truly affordable car. And that’s something we’ll make in the future. But in order to do that, we’ve got to get the cost of batteries down, we need to get better at manufacturing, and we need to do something about this curve.”
The first step was enlarging the battery’s form factor and creating a shingled interior. This so-called tabless battery enables electrons to move more efficiently through the battery, producing a 14% KWh cost reduction.
A shift from a wet electrode process to a dry process - spurred by the company’s acquisition of Maxwell Technologies - will save a further 18% and drastically reduce the company’s battery factory footprint.
“Tesla is basically aiming to be the best at manufacturing of any company on earth,” said Musk. “Eventually, every car company will have long-range electric cars...but not every company will be great at manufacturing. Tesla will be absolutely head and shoulders above everyone else, that is the goal.”
Tesla then examined the anode and concluded that raw, metallic silicon utilizing a binder was cheaper and more efficient than the current crop of highly processed silicon materials. Using metallic silicon yields a 5% reduction per KWh.
“Why is silicon awesome?” Baglino said. “It’s awesome because it’s the most abundant element in the earth’s crust after oxygen. It’s sand.”
The company next took the step of replacing current-gen cobalt cathodes with nickel, using a process that eliminated the legacy metal sulphate step. Tesla also plans to release iron, nickel-manganese, and pure nickel versions of its batteries in-step with projected range requirements, with pure nickel ending up in long-haul semi trucks. The cathode adjustments will save 12% per KWh.
Lithium for its batteries - another potentially limiting factor - has been mitigated by Tesla’s rights to more than 10,000 acres of lithium deposit acreage in Nevada.
“Lithium is not like oil. There’s a massive amount of it pretty much everywhere. There’s enough lithium in the United States to convert the entire United States fleet to electric,” Musk said. A new Tesla-developed process using ordinary salt for extraction dramatically lowers the environmental footprint for lithium production, Musk added.
“We can sort of take a chunk of dirt out of the ground, remove the lithium, and put the chunk of dirt back in the ground,” he said.
Finally, Tesla plans to make its batteries structural and to cast the vehicle in two pieces using a proprietary aluminum alloy.
This saves an additional 7% per KWh, for a total of 56% savings.
“In the early days of aircraft, they’d carry the fuel tanks as cargo. Then someone said, ‘What if we just make the fuel tanks in wing shape?” Musk said. “We’re doing the same for cars.”
Taken together, Tesla’s KWh reductions and planned efficiencies will bring the cost of a fully electric, autonomous vehicle to $25,000 in three years, Musk said.
Throughout the presentation, Musk stressed that the promised cost savings and total KWh capacity expansions would take time, money, and effort - a point he reiterated on Twitter prior to the Battery Day event.
He also prefaced his Battery Day presentation by saying that Tesla would continue to utilize third-party suppliers.
“We intend to increase, not reduce battery cell purchases from Panasonic, LG & CATL (possibly other partners too). However, even with our cell suppliers going at maximum speed, we still foresee significant shortages in 2022 & beyond unless we also take action ourselves,” he tweeted.