What is Tesla’s core technology advantage over competitors? Does it even have one? Those are questions that often come up when discussing Tesla’s lead in the electric vehicle sector. Since Tesla open-sourced its patents, some suggested that its technology advantage is virtually nonexistent since competitors could simply use it, but it’s not as simple.
While Tesla’s patents are indeed opened for use in electric vehicles as per its ‘patent pledge’, Tesla is still keeping some trade secrets and the company is fairly secretive about some of its development and manufacturing processes, especially when it comes to batteries, which could very well be Tesla’s core technology advantage led by its co-founder and CTO, JB Straubel.
A top Tesla analyst, Andrea James, goes as far as saying that Straubel is the world’s expert in battery technology. Before going through Straubel’s credentials and the reasons she thinks that, here’s a quick reminder of why we called James a “top Tesla analyst”.
Andrea James is a former business reporter who made the transition to stock analyst in 2009 when she was headhunted by Dougherty & Company. A year later, when the firm’s Vice President of Senior Research Analyst, Jeff Evanson, left to lead investor relations at Tesla, she took over the role and covered the electric automaker for the financial firm.
She is best known for being the first professional stock analyst to assign a buy rating to Tesla after its IPO in 2010.
Here’s her track record on buy ratings for TSLA via Tip Rank:
Needless to say, she has one of the best track record as a Tesla analyst. She is also one of the few analysts who embraced Tesla’s mission early on, which is still a problem among Wall Street analysts and investors. They often have difficulties envisioning the company’s long-term mission.
Earlier this year, James left her role at Dougherty & Company and started a coaching business, which means she is now free to talk more openly about her time covering Tesla from 2010 to 2016.
Yesterday, she gave an hour-long interview to DaveT, a TMC investor forum member and the curator of the Tesla Weekly newsletter. You can watch it in full below. It’s well worth the watch for anyone interested in Tesla and especially the world of TSLA analysts.
It is during this interview that James made the claim that Straubel should be considered the world’s expert in battery technology.
Something important to consider here is that Straubel has been with Tesla since the very beginning. He is actually credited in bringing Elon Musk on board and therefore, he technically predates Musk at the company. Although, Musk was later also made a co-founder due to his crucial contribution to the company since the very early days.
Straubel, who holds a bachelor’s in energy systems engineering and a master’s in energy engineering from Stanford University, has been leading Tesla’s energy storage effort since the beginning. He is in large parts credited in developing Tesla’s expertise in building large battery packs from small cylindrical li-ion cells, something that has never been done before Tesla, at first with partner AC Propulsion, in 2003-2004.
Now back to James’s claim. When discussing how she managed to see Tesla’s advantage in energy storage, she recalled talking to battery experts at a conference and mentioning that Tesla’s battery pack cost per kWh was way below the industry average. She says that she was met with hostility from the experts who plainly claimed that Tesla was lying about its technology. She added:
“The world’s expert in battery technology is JB Straubel, the CTO of Tesla, period. He is the expert in the world and he is not a liar. If Tesla is not lying, that means they have something.”
Dave followed up on James’s claim and added that he was himself impressed by Straubel’s knowledge and passion for batteries after a conversation with him, but he asked why James thinks he should be considered the world’s expert in battery technology. She said:
“If you think about it, Tesla is the largest buyer of li-ion batteries in the world. They procure more lithium-ion batteries than anyone else and that was true even at the time of the IPO in 2010. Tesla had the largest li-ion battery database for automobile use, and of course, now they are migrating to other uses, but in term of the world’s problem of energy storage, Tesla’s solved it.
That’s what an electric car does, it solves the world’s problem of energy storage.”
Tesla’s battery pack cost is reportedly below $190 kWh. In the past, Elon Musk also commented on Tesla monitoring dozens of battery development efforts, hence the reference to the database.
James elaborated on why she believes in Tesla’s lead in energy storage:
“In the early days (~2012), when we used to tour the factory, we were allowed to go up to the second floor (where Tesla houses its secretive battery development group) […] I was one of the first to be allowed on that second floor. I wasn’t allowed to take pictures, but I got to tour it and see the floor, and see the machines that they had to build. Elon talks about “the machine that builds the machine” and you know – you’d look at these parts and you couldn’t procure these parts. They had to make these parts.”
She then recalled emailing Straubel after the tour to let him know how impressed she was by what they were doing: “tears came to my eyes when I was on the second floor. I can’t believe what you guys are doing” she said. Straubel responded: “Yeah, I don’t think people realize what is going on here”.
Here’s the full interview: