Battery Costs Halved Within Three Years: Tesla

Tesla CEO Elon Musk himself announced that the advancements to be unveiled during Battery Day would “blow your mind.” Wall Street, however, was not impressed by the rather thinly-stretched improvements on display, reported The New York Times. Nonetheless, Musk announced that battery costs would decrease by 50 percent within three years.

Wall Street was anticipating direct improvements. Musk, instead, argued that Tesla’s success should instead be measured by how much the company manages to impulse sustainability in a society, reported GreenTech Media. Musk used the Battery Day to break down the battery production process in concrete steps, showing where gains can be made over a time period of three years. Within this time frame, a 54 percent increase in range, a decrease in capital investment needed for manufacturing and a 56 percent decrease in dollar per kilowatt-hour pack price can be achieved.

Arturo Zarate, Global Business Development Energy Storage at Dynapower, explains why batteries made for the automotive market are essential to the energy environment. “Lithium-ion batteries dominate the energy storage market because of their price, which is not necessarily driven by the increasing demand of energy storage but by the increasing demand in the number of electric vehicles. The same cells that are used in these vehicles are used in storage,” he said.

The energy sector, just as battery manufacturers, is key in bringing down battery costs as together, they provide the scale needed to tackle prices, Zarate told MBN. “If you look at Tier 1 battery manufacturers such as Samsung SDI, CATL, BYD, or LG, they can leverage two markets to reduce the price on their lithium-ion battery cell technology they produce due to increased volume. This reduced cost is a major incentive for developers and EPCs.”

In order to slash costs, Tesla mainly focuses on implementing a thicker cell form factor than it had been using until now. By removing tabs, the battery becomes ‘tabless’ and therefore lighter and easier to manufacture. Furthermore, Tesla aims to revamp its production process, bringing it in-house instead of outsourcing it to Panasonic as it did before. Tesla’s Fremont factory is currently in a pilot stage. The company is planning to expand its capacity there and focus on productivity. Even though Musk aims to bring more manufacturing indoors, he said that Tesla would continue to rely strongly on players such as Panasonic, LG Chem and CATL.