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Tesla's business model depends on continual improvements in the cost and energy density of batteries. When Tesla was founded in 2003, it was barely possible to build a battery-powered sports car with a six-figure price tag. Over the next 15 years, Tesla could use cheaper, more powerful batteries to build larger, longer range cars at lower prices.
Tesla believes that progress will continue – and maybe even accelerate – over the next few years. And it doesn't wait for other companies to come up with better battery designs. Over the past few years, Tesla has brought a large team of engineers to rethink every aspect of Tesla batteries, from the chemistry in the cells to the way the batteries are built into vehicles.
At an acclaimed event on Tuesday, Tesla pulled the curtain back on a number of improvements the company plans to introduce over the next three years. Overall, Tesla says that all of these innovations taken together will reduce the per-kWh cost of its batteries by 56 percent.
As a result, Elon Musk said, Tesla will be able to achieve a long-standing dream: a truly affordable electric car.
"We are confident that we can design and manufacture a compelling $ 25,000 electric vehicle in the long term," said Musk. He added that this would "probably happen in three years". Tesla has not provided a name or other details about this proposed low-cost Tesla.
Since this is Elon Musk, it's worth looking at the timeline with a grain of salt. And as an upcoming deep dive by Ars Technica's Scott Johnson will explain, some of Tesla's alleged breakthroughs – particularly those related to cell chemistry – should be viewed with skepticism.
Reducing battery costs by 56 percent over three years seems like a big improvement – and it would be – but it would represent a pace only slightly faster than what the broader battery industry has seen in recent years . For example, research firm BloombergNEF estimates that the market price for a 1 kWh battery fell from $ 1,160 in 2010 to $ 153 in 2019. This equates to an almost eight-fold decrease in nine years – or halving battery costs every three years.
Still, Tesla may be uniquely positioned to benefit from falling battery costs. It has a strong brand and unmatched infrastructure – including the SuperCharger network – to make electric vehicles mainstream. So if Tesla can deliver the innovations unveiled on Tuesday, it has a bright future.
Tesla's secret weapon: vertical integration
Tesla designs and builds more of its own parts than most automakers. As a result, Tesla can look for cost savings and performance improvements at every stage of its supply chain. It can optimize the smallest details of individual components and tinker with the overall design of a vehicle. And it can optimize components for the specific requirements of its own products.
This attention to detail was evident in the battery presentation on Tuesday. Tesla's predicted 56 percent reduction in battery costs cannot be attributed to a single technological breakthrough. Rather, it is the cumulative result of improvements in battery chemistry, cell design, the cell manufacturing process, and the way batteries are built into vehicles.
In the past, the majority of Tesla batteries were built around battery cells manufactured by Panasonic in the Gigafactory, the Nevada battery factory jointly developed by the two companies.
Tesla plans to continue working with Panasonic and other cell suppliers, but will require so many batteries in the years to come that the company will also begin producing its own cells. Tesla estimates it will produce 200 GWh of its own cells by 2022 and a massive 3,000 GWh by 2030 (Tesla says its Nevada Gigafactory produced around 150 GWh of batteries in 2018).
Tesla has ambitious plans for its new battery cells. You'll be using a variety of battery chemistries, including one that eliminates the use of expensive cobalt in favor of nickel.
However, Tesla also expects double-digit cost savings from more prosaic improvements to its manufacturing process. Drew Baglino, Tesla's vice president of power engineering, pointed out the bottling industry, where soft drink makers maximize throughput by keeping bottles moving as a model.
"Along with our in-house design team who make and design these devices, we've been thinking about how to make the best cell and thinking about how to make the best devices so we can get the fastest parts-per-minute rates anyone can achieve these tools, "said Baglino.
Baglino argued that being vertically integrated with the teams designing the machines is key to higher throughput because "we don't all have these constraints between one device and another. We can design the entire machine as one machine and all of them these remove unnecessary steps. "The result: a seven-fold improvement in cell production throughput.
Tabless cells and lithium degradation
Enlarge /. Tesla has developed extensive "education" facilities where a finished cell is charged for the first time and quality tested. Each of these cabinets has slots for charging and testing dozens of cells. Robots load and unload the cabinets.
For example, in a cylindrical battery, the cathode and anode are tightly wrapped around one another. In a conventional battery, a "tab" protrudes from each side of this roll – one connects the wrapped cathode foil to one end of the cell, the other connects the anode to the opposite end. Tesla says it pioneered a new internal "tabless" structure that is not only less prone to overheating, but also easier to manufacture. By eliminating the tabs, there is less need to start and stop the manufacturing process to ensure that the tabs are properly positioned in each spool.
Tesla says it even plans to get into the mining business. Lithium mining is currently mainly taking place outside the USA. But Musk says it's not because there's a lithium shortage in the US. In fact, he argued, lithium is abundant all over the world; In Nevada alone there is enough lithium in the ground to replace the entire US vehicle fleet with battery-electric cars. Therefore, Tesla plans to start its own lithium mining in Nevada with a new mining process developed by Tesla.
"We actually bought rights to a lithium clay deposit in Nevada – over 10,000 acres," Musk said. "The type of mining is very environmentally sensitive as we take a piece of dirt out of the ground, remove the lithium, and then bring the piece of dirt back where it was."