June 19, 2014
Tesla Claims Much Lower Battery Costs Than Competitors
Tesla claims an electric battery cost of less than $300 per kilowatt-hour. Tesla further claims their costs are less than half of their competitors. True? Are Panasonic's competitors really selling for such higher prices? Or is Panasonic really selling for much more to their other customers? I'm skeptical.
Tesla's 85 kwh battery provides 306 miles of range at 55 MPH. Therefore given their per kwh cost the battery costs about $25k. Note that's their cost before retail mark-up.
Because of rising oil prices due to rising production costs the price of electric vehicle battery costs will matter much more in coming years. If battery costs plummet down below $200 per kwh before global oil production goes into terminal decline our migration away from oil will be much easier.
Randall Parker, 2014 June 19 10:29 PM
Tesla batteries are cheaper, but Leaf batteries are higher performance. This means a Leaf can have a small battery pack, while currently a Tesla requires a large battery pack to avoid lifespan and performance issues. Basically long range electric cars should use cheaper Tesla battery packs while currently short range town cars should use higher performance Leaf style batteries. Car battery packs are works in progress so it's not possible to say what will happen in the future, but Tesla may concentrate on longer range cars while Nissan may concentrate on short range town cars.
One overlooked dimension in the cost of batteries is that the batteries that have very few rechargeable cycles are considerably cheaper than "high-quality" batteries that can be charged many hundreds of times, or the ideal batteries that are supposed to be charged thousands of times.
The reason for the insistence on batteries that can be charged many times is because the current marketing model assumes that the batteries will be bolted into the car for many years before being replaced. What if we adopt a slightly different economic model where we only insist that the battery can be charged a minimum of 50 times before replacing the battery? Imagine a Tesla car with 350 mile range, but with a cheap battery (say $1000) that breaks down after charging it only 50 times. This would be good enough because most people would need to charge this battery only once a week, and at the end of the year they would just replace the battery at the service station. The lithium inside batteries easily gest recycled at the factory to build new batteries.
However there are already great improvements in lithium and sulfur based batteries that are both cheap and very dense in energy, but they can currently get charged only a few dozens of times before becoming useless.
In many batteries the main problem is to find good materials that do not deteriorate when the battery is recharged. In general the lithium ions enter and leave cavities in the battery, causing periodic expansions and contractions, leading to internal fracturing, and cheaper materials often break down after charging 100 times. But who cares if such a simplified battery is cheap enough to replace it every year at the service station? Note that electric cars have very few repair requirements, no oil change, no air filter, no transmission oil, no complicated gear boxes, no fuel injectors, etc. Electric cars without batteries would easily last more than 20 or 30 years, only the the cheap electric motors, tires, etc, would need to be changed. A bare bone electric car without battery would cost less than $15,000 if expensive luxury items (like the bells and whistles in Tesla cars), and if cheap batteries are available, then changing the battery once a year will not be a burden.
Thus, a battery that costs $1,000 but lasts only 1 year, would be like buying a $10,000 battery that lasts 10 years.
Tesla are heroes. I am a patent examiner (who deals with art unrelated to cars or batteries) who was able to sit in on technical presentations by Tesla here at the PTO campus, as well as demos.
Some of the ways Tesla is saving the day amid the sunsetting of global oil:
Massive investment to double world electric battery production (and no doubt drop the price)
Electric cars are just much more efficient. Consider that there is no need for oil as lubricant because there is little mechanical friction and hardly any internal contact. No transmission, just one gearing that works at all speeds. Frictionless acceleration and limited frictionless braking. No pistons, no losing most of your energy out of the tailpipe as heat. Much less air resistance because there is no air intake and no grill.
The cars usually charge at night, off-peak for the grid. Thus you don't need new power plant capacity.
You probably aren't even taxing the grid net-net when you swap a gas powered car for an electric, because you save a huge amount electricity that was needed for refining the gasoline.
America does have a little bit of a problem on the electric side though because the left hates both nuclear and coal. NatGas will run out in due course.
I expect in the future, China will use currently known technology to turn coal into gasoline and sell it to us for huge profit, carbon be damned, since we will have rejected coal plants locally. We will dig up massive amounts of coal to send to China for this purpose since we are too holy to burn it ourselves and will outsource combustion to maintain our spiritual purity.
Go check out Balqon. On their website they are selling large LiFePO4's for about $330/kWHr presumably to the general public. LiFePO4's last quite a bit longer than the cobolt cathode battery that Tesla is using but have 15% less power density. So perhaps Tesla's $300/kWHr isn't so off mark. Companies pursuing LiFePO4 cathode tech didn't do so well financially over the past few years but perhaps it is now turning a corner.
The LiFePO4 cathode battery isn't as mature as the cobolt cathode battery so there may be some potential for further cost "Swanson curve" reductions in the mfg process. If you look at the costs of the materials, the nickel & cobolt in the cobolt cathode battery that Tesla uses is becoming a large portion of the cost. So perhaps the LiFePO4 is the better chemistry in the long run since it is made from common elements (I think LiFePO4 is even a naturally occurring Olivine mineral).
Okay, we now have a replacement price for the Nissan Leaf battery pack - $5,500:
That gives a cost of about $230 a kilowatt. Or since you get a credit of $1,000 for the old battery perhaps about $270. But it does mean that conventional gasoline passenger cars are set for extinction. For an Australian driving the average of 15,000 kilometers a year it gives a battery cost of about 5 cents a kilometer. Less if you assume the battery lasts longer than the eight year warranty. Anyone who can charge it from home solar will have a fuel cost of about 1-2 cents a kilometer thanks to our low solar feed-in tariffs for a total of about 7 cents a kilometer. With our $1.50 a liter gasoline prices a fuel efficient compact gasoine car that gets 15 kilometers to the litre is going to cost 10 cents a kilometer to fuel. This means the electric car is cheaper to run before its lower maintenance costs are included. As a mass produced electric car is cheaper to build than a comparable gasoline car before the cost of the battery is included this means the days of liquid fueled vehicles are numbered. It remains to be seen if they can hang on in hybrid or highly efficient form. And while there are a few countries with particularly low gasloine costs and the price of oil may drop, I expect the price of car battery packs to continue to fall and their reliability to continue to improve.
Thank you very much for that link. Wow, battery costs have fallen faster than I previously believed. I think this means Tesla does not have their claimed advantage in battery costs.
This is very good news for our need to transition away from oil. PHEVs and HEVs can scale up in a big way. We are still going to have oil price recessions. But once the public understands that oil production is in permanent decline new car buyers can shift to electric cars.
One thing still puzzles me though: the price of a Nissan Leaf. Why over $28k MSRP? Seems too high if that is the cost of the battery.
The $5,500/$6,500 figure may be the marginal cost of the battery pack but not include the development costs which they are trying to get back through the higher initial cost of the vehicle. And it is possible that they are losing money on that battery pack price at the moment because they think the extra sales they will get from having a set low replacement cost will be worth the loss. But obviously they are confident they will be able to produce battery packs at that cost before they have to replace too many of them, as consistently losing money is not a successful business strategy.
And the $28k figure may seem a lot to buyers, but it may seem just fine to Nissan. They spent a lot of money getting to the point where they are now and aren't afraid to rake some back. This is obvious to Australians who are currently charged $38,000 US for a Nissan Leaf. But this just means there is plenty of room for further price cuts. Nissan has cut its price before and it will continue to do so. And just how fast this will happen will depend on how effective the competition is.
the price of a Nissan Leaf. Why over $28k MSRP?
Federal and local credits reduce the price by over $10k in a lot of places (San Joaquin Valley CA, Illinois, etc.), plus discounts on insurance, electricity, chargers, HOV status, etc. I suspect Nissan thinks that if you're not willing to pay $18k for an EV, there's no price low enough for you.
Georgia has $5k credit, so the net price is about $16k. That's hard to beat.
Apparently you can combine the state and federal credits, and basically lease a Leaf for free: start with a $199 per month 36 month lease from Nissan, and add credits. The state credit gets reduced some with a lease, but the net cost is still roughly zero!