There was a lot of news that came out of Tesla shareholder meeting this week, but there was one important statement that sort of went under the radar.
Elon Musk is generally careful not to use the term “breakthrough” when describing advancements in battery technology but he has used it this week to talk about Tesla’s latest advancements in battery energy density and cost.
Tesla’s CEO even gave us a pretty good idea of the automaker’s current battery costs.
One of the automaker’s most important goal is to achieve a battery pack cost of $100 per kWh.
At that cost, the battery pack isn’t a bottleneck to achieve price parity with gas-powered cars, which would make any of Tesla’s vehicles even more competitive.
Tesla has always been careful about not revealing its battery cost and CTO JB Straubel reiterated that at the meeting this week.
“It’s difficult for us to talk about specific cost numbers. It’s a difficult topic, but we are still very confident that we have the best price and performance of anything out there in the world. If there’s anything better, I don’t know about it and we have looked as hard as we possibly can. We try to talk with every single battery startup, every lab, every large manufacturer. We get quotes from them. We test cells from them. If there’s anything better, we are all ears, we want to find it, but we haven’t found it yet.”
But Musk later did reveal a few interesting details and price points.
After thinking about it for a moment, Musk added:
“We think we have come up with some pretty cool breakthroughs on energy density and cost of the battery pack. It’s going to be pretty great.”
The CEO thinks that the company is on pace to achieve a battery cell cost of $100 per kWh by the end of the year depending on commodity prices remaining stable in the next few months.
While we are only talking about battery cell costs and not the cost of the whole battery pack, it would still be an impressive price point.
In comparison, GM is currently buying battery cells from LG Chem for the Chevy Bolt EV at $145 per kWh and Audi says that it is buying batteries at $114 per kWh for its upcoming e-tron quattro that has yet to launch.
As for the cost at the pack level, Musk sees Tesla achieving that important price point of $100 per kWh for the overall battery pack in less than two years.
Musk also added that he sees Tesla achieving a 30% improvement in volumetric energy density within 2 to 3 years using current proven technology that “needs to be scaled and made reliable.”
Such an improvement in volumetric energy density would mean that Tesla could, for example, fit 130 kWh of energy capacity in its current Model S and Model X 100 kWh battery packs and push the range of those vehicles over 400 miles on a single charge.
Since the unveiling of the Tesla Semi, we have been arguing that the vehicle’s launch at a price point of $150,000 to $180,000 is dependent on Tesla achieving an important battery cost breakthrough.
Musk’s new comments are now aligned with our expectations.
It looks like Tesla’s bet on the Gigafactory is starting to pay off with much lower battery cost.
$100 per kWh at the battery cell level by the end of the year would also help Tesla launch the Model 3 standard battery pack starting at $35,000.
We don’t know exactly what would be the battery pack cost on top of the cells, but I find it hard to believe that they are over $50 per kWh at the volume that Tesla is producing Model 3 battery pack these days.
What do you think? Let us know in the comment section below.
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