I find it amusing to see so many people questioning why Tesla didn't release a cheap Tesla sooner. The answer is: They don't have the batteries to do that. That's why they are building the GigaFactory.
People don't get that, on a large industrial scale, you actually have to think about supply. They think you just spend money and supply shows up because they are used to thinking on a household scale where supply is generally infinite for anything they could possibly consume.
I think one pervasive economic fallacy is that any amount of money can fix anything. We just need to find someone to write a big enough check, either the government or wall street and all those batteries will materialize instantly out of some technology horn of plenty. This has driven the focus on "stimulus" and "aggregate demand" in various forms of economic dialogue. We could use more supply side thinking about very large problems that the economy faces, especially in the public sector. Health Care, for example, is one of those things where, if you're not thinking about supply, spending more money just makes everything more expensive.
Energy STORAGE is a huge bottleneck issue for anyone that follows renewable energy news as well... Solar power itself has been cheap enough to be viable for a long time, 330W 72-cell panels for roofs have been $0.64/watt for several years now. You can quite economically cover the roof of a building in enough high-efficiency 60 or 72-cell panels to generate far more kWh in a year than the building will consume in the same year, but the problem is storage for when the sun isn't shining. It's easy to produce 1600kWh/month from solar panels on a roof, if your house only consumes 1200-1400kWh/month, but you need to use many of your 1200-1400 kWh/month at night.
Off grid energy storage has been severely hampered by the lifecycle cost of $ per kWh stored. Lead acid batteries suck, lithium ion/liPo has until very recently been very expensive in $/kWh. Other energy storage systems have been limited in scale or are only feasible at very specific places, such as large scale pumped-storage hydroelectricity.
If the cost of $$$/kWh stored comes down far enough, it will be entirely possible to build a home that has no connection to the electrical grid at all. Assume this prototypical home is in an American city where electricity from the grid costs 8 cents per kWh. If you make a refrigerator sized battery low enough cost it may be possible with TODAY's cost of solar panels to have a lifecycle cost of 6 cents per kWh consumed. While simultaneously having the effect of making that home energy-independent from the grid and the whole thing being its own immense UPS.
> Health Care, for example, is one of those things where, if you're not thinking about supply, spending more money just makes everything more expensive.
If you haven't, I highly recommend Paul Starr's Social Transformation of American Medicine. The number of MD medical school seats in the US has remained at about 16k-17k for 100 years.
When stimulus is suggested in a Keynesian context, it is not to create new factories, etc. It is to provide demand to fully utilize the productive capacity which the economy already has, but which is not currently being used because of lack of demand.
Well Musk has often claimed that the cost of batteries doesn't magically go down due to big new innovations like we've seen in some other industries. Rather it's due to constant iterations, making small improvements, and economies of scale. Particularly that latter part is hugely important and hasn't been much of a factor yet in the specialised market that is car batteries. And that's why they're building a gigantic factory, because producing at scale can really do a lot to push the price of batteries down. But the notion that this is somehow unrelated to money is kind of silly, this is exactly the type of thing you could fix by throwing lots of money at it. The very reason they couldn't do it sooner because there was no cashflow to finance such a massive project.
Fortune 500 are all sitting on record amounts cash right now, they apparently see no place to invest it profitably.
The thinking behind trying to pump up demand is that if people are buying more, the Fortune 500 will put that money to work selling things.
Traditional supply-side economics is basically "shove money into those companies however possible".. but they're already sitting on piles of cash and doing nothing with it. How does more of that help?
Tesla consumes a small fraction of global lithium-ion battery production. When the overall market is much larger than the marginal consumption, the assumption that offering more money increases local supply holds perfectly well. Even if you assume that Tesla is demanding 5% of the battery market which would be an outside estimate that's still well within the region where paying more will get you more.
> I find it amusing to see so many people questioning why Tesla didn't release a cheap Tesla sooner. The answer is: They don't have the batteries to do that. That's why they are building the GigaFactory.
Interestingly (for me), when I leased my leaf the sales guy was talking about how Nissan could make a car with a much better range, but chose not to. It was amusing hearing it from a (otherwise backwards) dealership.
It makes sense, of course. What I keep wondering is, if energy density (not just cost) increases significantly in the future, couldn't existing electric vehicles be retrofitted with "aftermarket" cells? Currently, resale value is pretty low, mostly due to battery concerns (both longevity - which I think is unfounded - and hopes of better tech). But, with otherwise so low maintenance costs, I figure these cars could have a pretty long life.
Building the cheap mass market EV was what we tried in Norway. An utter failure. What it meant was a boring, underpowered car at a high price. Exactly the ugly little cars which EVs where known as. Elon Musk understood you had to start at the high end with low volume and high margin to fund your way to the mass market car.
That's proving too much. It's true that factories don't build themselves automatically. But they do require funding. Unless someone predicts demand for a product, they won't write the check, and the people who actually do the work don't get hired.
Better to say that demand is necessary but not always sufficient. Proven demand is a great motivator, but the manufacturers may require a lot of lead time if it's unexpected.
> fallacy is that any amount of money can fix anything.
That's exactly why I started http://openbatt.org
The problem exists partly because incremental knowledge gains, such as additive formulas, are hard to trade.
Yes, exactly this. And it applies in many things, such as guaranteed basic income (what would that do to the money supply, to the labor supply, etc). Too many times we think of specific scenarios but those are misleading unless you take the big picture and all its moving pieces into account.
> We could use more supply side thinking about very large problems that the economy faces
What do you mean by this? I was under the impression that "supply side economics" meant throwing money at your problem to solve it (and removing regulation). That sounds like it's exactly what you're arguing against.
Disclaimer: I own one (Model S P85+, about 2 years old). And everyone I let drive it (yes, I am crazy enough to do that... As a fan who pushes the bleeding edge, it's important to share the experience in order to change minds... Anyway, my insurance covers me even when I'm a passenger!) cannot stop talking about it afterwards. I actually think Tesla's market is limited right now not only by the people who can't afford one, but by the people who haven't even had the opportunity to drive one yet and have thus not yet had their eyes opened...
Driving is believing. If you have any opportunity at all to experience driving one... Do not hesitate. It makes everything else feel like a noisy clunker.
The older guys I let drive it, like the real car guys of old... they have the best reactions. The look of shock and disbelief on their faces... The stories they start telling about their first muscle cars... The whooping and "OH MY GOD"'s and whatnot... It's totally awesome
I test drove one. Just driving it normally (as I would any high-performance sports car), I scared the hell out of the sales lady. It's the best-engineered car I've ever driven. The Germans are going to have to up their game because of Tesla.
How do you deal with the 8-year limited lifetime? I evaluate a Tesla at 4x the cost of a normal car: I can get a new car for €15k lasting 15 years with a lively second market, Teslas are ~€30k, with free supercharger network, and 8 years warranty but no road license after that, and no second-hand market for spare pieces. Have you calculated the total cost of ownership (including insurance and free petrol) and how did it compete with other cars?
caution.
1. a tesla accessory site.
2. the report is full of projections and hard to understand what is wishful and what is not.
3. GM: $145/kw Oct 2015 - Tesla $100/kw in 2020, how is Tesla killing it?
Tesla needs more than just steady supply of cheap batteries to make it. As a company it's boom or bust. Musk is extremely bold. Many investors forget that bold=risk.
1. Aggressive cash-negative growth. Tesla is not going to make profits with Model 3. Currently Tesla needs more capital to finance future losses instead of than future returns. Musk has wooed many investors that may not be as patient as they should. Musk estimates that Tesla will make profit in 2020, but it's not looking good.
2. No sustainable competitive advantage in technology. Most of the important intellectual property is owned by Panasonic. Cars are nice and different, but they have suffered from reliability problems. Tesla's warranty costs are also higher than its competitors ($2,000 in warranty accruals and $1,000 on repairs per vehicle in last year).
3. Tesla is small manufacturer and it has fragile and stretched supply chain (Tesla manufactures tens of thousands of cars, competitors manufacture millions). Subcontractors are not going to squeeze their profit margins for Tesla.
Even if his dream "all cars will be electric" will become true, Tesla as a company is not necessarily the winning bet.
Agree it's a puff piece, but the full quote you took that from is "General Motors announced that battery costs for its 2016 Chevrolet Bolt had fallen to USD 145/kWh by October 2015, and that it hopes to reduce costs below the USD 100/kWh mark by 2022 (GM, 2015, EV Obsession, 2015). The electric car manufacturer Tesla aims to break the USD 100/kWh mark by 2020 (HybridCARS, 2015)."
Also, in reading some of the background on the numbers, journalists seem to be failing (surprise!) to distinguish between $/kWh per battery cell vs battery pack.
Purely speculating here, but once the gigafactory is operational they'll unveil the massive trick up their sleeve - Musk will announce new custom cells based on high density sodium-ion technology. Tesla will become a world leader as an energy company rather than an automative one.
US$145 / kWh -- GM's late 2015 price for Volt / Bolt power -- is OK.
But the differential in price, in New England where I live, between peak and offpeak electricity, is US$0.027 (2.7 cents) per kWh. I worked it out: my investment in a battery setup at those rates would take about 17 years to pay off: far too long.
If we want this to work, we need a smart grid: a grid that can announce pricing based on current costs. Then we need baseload electricity costs (hydro, nuclear, gas, coal) to be significantly lower than peakload (fuel oil, Storm-King style pumped gravity storage) costs.
The smarts for a household energy storage system wouldn't be hard to work out IF the grid were smart enough to advertise present costs, and meters were smart enough to bill for present costs. My Power Wall could charge with cheap power and run my lights during a nasty summer brownout.
I understand they're experimenting in Europe with announcing prices using the FM radio sub channels now used to display song names. That's interesting.
4x drop in battery prices, (or) 5x increase in density in only 8 years. Pretty damn good for batteries that "aren't following Moore's Law", something most battery-related articles are quick to remind us. Hopefully, this continues for at least another decade, which should make EVs more than competitive with ICE cars.
Between this and the projected increase in PV solar efficiency, drop in cost and toxicity of manufacture... I don't think I've felt this kind of cautious optimism for a renewable energy infrastructure before.
Look to China for mass production of cost effective batteries, not Tesla... firms like EV West help me demystify the true state of maturity of this market http://evwest.com/catalog/
That's what I'm afraid of. That China will push a "race to the bottom" not on just prices per se, but on lower prices with poorer quality batteries that hold much fewer charges and degrade faster, making you want to dump your EV battery after 3 years. But everyone will be too focused on their promotion of "cheap long range EVs" to notice.
I would love to see $100 kWh batteries. Worst case, my house uses 30kWh a day in electricity so 90kWh would be a 3 day+ UPS for the house. Update the solar on my roof and be off grid for an addition $9K in batteries? That would be totally doable for me.
I think it would be hilarious if houses went back to just having a gas hookup like it was prior to the spread of electricity.
So were are only talking about numbers they are hoping for, not currently in production? GMs numbers are current, what are Tesla's current battery costs? Just because they want 100 by 2020 doesn't mean they are leading the charge, simply leading the wish list.
Still waiting on density improvements because frankly 400kg for 200 odd miles of range is not good. Of course with higher density means better charging and hopefully standards are ready for it
Only public statement was in response to an analyst assuming Tesla was at $260. Their investor relations team confirmed they're below $190 (back in April).
We'll find out! The lesson from oil and gas is that people find ways once the price goes up and the demand is there. Lithium is very abundant. Do we know what percentage of the cost of the battery comes from material costs?
It will have to: Car makers will have to compete with the same amounts of production. Owning a petrol car at the time of global warming doesn't make you the boss anymore.
Can't wait to buy the plastic battery holder grids for Tesla-sized cells. My first 18650 pack is made from 4 laptop batteries and is capable of about 63 A at 0.2C.
I don't see how cars will have any impact on battery life. How many cars do we sell each year? Even if we assume 10% of cars are electric it is nothing but a drop in an ocean in terms of number of batteries being sold.
I am unable to see how Tesla car could have any impact on battery industry in terms of economy of scale. Any battery based solution for homes etc. could possibly bring economy of scale into picture.
Your comment would be more interesting if you put some numbers around your conclusions. I personally don't know the current and projected relative demand for Lithium batteries in electric cars and non-electric cars.
If people pay $35k for a compact car, why would you sell it cheaper?
Now Tesla introduced the Model 3,
I'd bet we'll see a $25k Leaf next year with better range.
It's business, don't blame it on the sub-par 25 year old technology batteries.
The big problem lies still in the fact that most electricity is generated from coal and nuclear. Every Tesla on the road today is effectively a coal powered car with the potential to be converted to green energy. Solar panels likely being the equilibrium. But the decline in battery cost is good, means it won't be long before they stop losing 1k on every car sold
You seem to be repeating the same falsehoods commonly quoted around Tesla stories.
> Every Tesla on the road today is effectively a coal powered car
Assuming that your energy is entirely produced by brown coal power plants, then even powering your electric car is still more efficient (and thus cleaner) than running a petrol car.
Power generation sources varies wildly depending on region - Nuclear, Gas and Hydro are big contributors in many areas. Wind and Solar in others.
> losing 1k on every car sold
you're conflating the profit on selling cars vs company profit. They make a profit on the sale of each Model S/X, they're investing a lot of money into expanding production.
Depending where you live and draw energy from it could very well be 90%+ renewable energy (such as a few European countries and most of Ontario/Quebec from hydro).
The IEA/OCED world energy production sources for 2015 [1]J:
41.3% Coal
21.7% Natural gas
16.3% Hydro
10.6% Nuclear
5.7% Other
4.4% Oil
And given the improvements in batteries and solar these numbers will continue to shift away from coal.
Additionally, you could also invest in a solar setup at your own house and Tesla is working on converting Supercharger stations to solar [2].
Power plants are a lot more efficient at extracting energy out of fossil fuels than your internal combustion engine. Even factoring in the efficiency of power generation, power distribution and your EV's electric motor... you're still polluting the environment less with an EV than pouring petrol directly into your traditional car.
[+] [-] narrator|9 years ago|reply
People don't get that, on a large industrial scale, you actually have to think about supply. They think you just spend money and supply shows up because they are used to thinking on a household scale where supply is generally infinite for anything they could possibly consume.
I think one pervasive economic fallacy is that any amount of money can fix anything. We just need to find someone to write a big enough check, either the government or wall street and all those batteries will materialize instantly out of some technology horn of plenty. This has driven the focus on "stimulus" and "aggregate demand" in various forms of economic dialogue. We could use more supply side thinking about very large problems that the economy faces, especially in the public sector. Health Care, for example, is one of those things where, if you're not thinking about supply, spending more money just makes everything more expensive.
[+] [-] walrus01|9 years ago|reply
Off grid energy storage has been severely hampered by the lifecycle cost of $ per kWh stored. Lead acid batteries suck, lithium ion/liPo has until very recently been very expensive in $/kWh. Other energy storage systems have been limited in scale or are only feasible at very specific places, such as large scale pumped-storage hydroelectricity.
If the cost of $$$/kWh stored comes down far enough, it will be entirely possible to build a home that has no connection to the electrical grid at all. Assume this prototypical home is in an American city where electricity from the grid costs 8 cents per kWh. If you make a refrigerator sized battery low enough cost it may be possible with TODAY's cost of solar panels to have a lifecycle cost of 6 cents per kWh consumed. While simultaneously having the effect of making that home energy-independent from the grid and the whole thing being its own immense UPS.
The powerwall is the first step towards this.
[+] [-] niels_olson|9 years ago|reply
If you haven't, I highly recommend Paul Starr's Social Transformation of American Medicine. The number of MD medical school seats in the US has remained at about 16k-17k for 100 years.
https://www.nytimes.com/books/98/12/06/specials/starr-medici...
[+] [-] rahelzer|9 years ago|reply
[+] [-] IkmoIkmo|9 years ago|reply
[+] [-] jbooth|9 years ago|reply
The thinking behind trying to pump up demand is that if people are buying more, the Fortune 500 will put that money to work selling things.
Traditional supply-side economics is basically "shove money into those companies however possible".. but they're already sitting on piles of cash and doing nothing with it. How does more of that help?
[+] [-] honkhonkpants|9 years ago|reply
[+] [-] outworlder|9 years ago|reply
Interestingly (for me), when I leased my leaf the sales guy was talking about how Nissan could make a car with a much better range, but chose not to. It was amusing hearing it from a (otherwise backwards) dealership.
It makes sense, of course. What I keep wondering is, if energy density (not just cost) increases significantly in the future, couldn't existing electric vehicles be retrofitted with "aftermarket" cells? Currently, resale value is pretty low, mostly due to battery concerns (both longevity - which I think is unfounded - and hopes of better tech). But, with otherwise so low maintenance costs, I figure these cars could have a pretty long life.
[+] [-] jernfrost|9 years ago|reply
[+] [-] skybrian|9 years ago|reply
Better to say that demand is necessary but not always sufficient. Proven demand is a great motivator, but the manufacturers may require a lot of lead time if it's unexpected.
[+] [-] alex_hirner|9 years ago|reply
That's exactly why I started http://openbatt.org The problem exists partly because incremental knowledge gains, such as additive formulas, are hard to trade.
[+] [-] DougN7|9 years ago|reply
[+] [-] jokoon|9 years ago|reply
I guess what drives the price of batteries is the fabrication process?
[+] [-] frozenport|9 years ago|reply
[+] [-] roninb|9 years ago|reply
What do you mean by this? I was under the impression that "supply side economics" meant throwing money at your problem to solve it (and removing regulation). That sounds like it's exactly what you're arguing against.
[+] [-] pmarreck|9 years ago|reply
Disclaimer: I own one (Model S P85+, about 2 years old). And everyone I let drive it (yes, I am crazy enough to do that... As a fan who pushes the bleeding edge, it's important to share the experience in order to change minds... Anyway, my insurance covers me even when I'm a passenger!) cannot stop talking about it afterwards. I actually think Tesla's market is limited right now not only by the people who can't afford one, but by the people who haven't even had the opportunity to drive one yet and have thus not yet had their eyes opened...
Driving is believing. If you have any opportunity at all to experience driving one... Do not hesitate. It makes everything else feel like a noisy clunker.
The older guys I let drive it, like the real car guys of old... they have the best reactions. The look of shock and disbelief on their faces... The stories they start telling about their first muscle cars... The whooping and "OH MY GOD"'s and whatnot... It's totally awesome
[+] [-] dreamcompiler|9 years ago|reply
[+] [-] tajen|9 years ago|reply
[+] [-] sremani|9 years ago|reply
[+] [-] Nokinside|9 years ago|reply
1. Aggressive cash-negative growth. Tesla is not going to make profits with Model 3. Currently Tesla needs more capital to finance future losses instead of than future returns. Musk has wooed many investors that may not be as patient as they should. Musk estimates that Tesla will make profit in 2020, but it's not looking good.
2. No sustainable competitive advantage in technology. Most of the important intellectual property is owned by Panasonic. Cars are nice and different, but they have suffered from reliability problems. Tesla's warranty costs are also higher than its competitors ($2,000 in warranty accruals and $1,000 on repairs per vehicle in last year).
3. Tesla is small manufacturer and it has fragile and stretched supply chain (Tesla manufactures tens of thousands of cars, competitors manufacture millions). Subcontractors are not going to squeeze their profit margins for Tesla.
Even if his dream "all cars will be electric" will become true, Tesla as a company is not necessarily the winning bet.
[+] [-] ethbro|9 years ago|reply
Also, in reading some of the background on the numbers, journalists seem to be failing (surprise!) to distinguish between $/kWh per battery cell vs battery pack.
[+] [-] synaesthesisx|9 years ago|reply
[+] [-] OliverJones|9 years ago|reply
But the differential in price, in New England where I live, between peak and offpeak electricity, is US$0.027 (2.7 cents) per kWh. I worked it out: my investment in a battery setup at those rates would take about 17 years to pay off: far too long.
If we want this to work, we need a smart grid: a grid that can announce pricing based on current costs. Then we need baseload electricity costs (hydro, nuclear, gas, coal) to be significantly lower than peakload (fuel oil, Storm-King style pumped gravity storage) costs.
The smarts for a household energy storage system wouldn't be hard to work out IF the grid were smart enough to advertise present costs, and meters were smart enough to bill for present costs. My Power Wall could charge with cheap power and run my lights during a nasty summer brownout.
I understand they're experimenting in Europe with announcing prices using the FM radio sub channels now used to display song names. That's interesting.
[+] [-] snowwindwaves|9 years ago|reply
Lots of utilities have adopted smart meters, Ontario and British Columbia certainly have. I don't know as much about the states.
1: http://www.nyiso.com/public/markets_operations/market_data/p...
[+] [-] mtgx|9 years ago|reply
[+] [-] dimino|9 years ago|reply
[+] [-] g4k|9 years ago|reply
Elon Musk mentioned recently that he expects a yearly capacity increase of 5% for the foreseeable future.
[+] [-] Aelinsaar|9 years ago|reply
[+] [-] jpm_sd|9 years ago|reply
Citation needed! In that time period, the highest energy density 18650 cells on the market have gone from ~200 Wh/kg to ~250 Wh/kg.
[+] [-] olivermarks|9 years ago|reply
[+] [-] mtgx|9 years ago|reply
[+] [-] ChuckMcM|9 years ago|reply
I think it would be hilarious if houses went back to just having a gas hookup like it was prior to the spread of electricity.
[+] [-] Shivetya|9 years ago|reply
Still waiting on density improvements because frankly 400kg for 200 odd miles of range is not good. Of course with higher density means better charging and hopefully standards are ready for it
[+] [-] justina1|9 years ago|reply
Only public statement was in response to an analyst assuming Tesla was at $260. Their investor relations team confirmed they're below $190 (back in April).
http://electrek.co/2016/04/26/tesla-model-3-battery-pack-cos...
[+] [-] macspoofing|9 years ago|reply
[+] [-] Brakenshire|9 years ago|reply
[+] [-] tajen|9 years ago|reply
[+] [-] disposeofnick9|9 years ago|reply
[+] [-] notJim|9 years ago|reply
[+] [-] tn13|9 years ago|reply
I am unable to see how Tesla car could have any impact on battery industry in terms of economy of scale. Any battery based solution for homes etc. could possibly bring economy of scale into picture.
[+] [-] macspoofing|9 years ago|reply
[+] [-] unknown|9 years ago|reply
[deleted]
[+] [-] dovdov|9 years ago|reply
[+] [-] agumonkey|9 years ago|reply
[+] [-] Animats|9 years ago|reply
We're not seeing that kind of improvement in mobile devices.
[+] [-] teslaberry|9 years ago|reply
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[+] [-] bunkydoo|9 years ago|reply
[+] [-] will_hughes|9 years ago|reply
> Every Tesla on the road today is effectively a coal powered car
Assuming that your energy is entirely produced by brown coal power plants, then even powering your electric car is still more efficient (and thus cleaner) than running a petrol car.
Power generation sources varies wildly depending on region - Nuclear, Gas and Hydro are big contributors in many areas. Wind and Solar in others.
> losing 1k on every car sold
you're conflating the profit on selling cars vs company profit. They make a profit on the sale of each Model S/X, they're investing a lot of money into expanding production.
[+] [-] dmix|9 years ago|reply
The IEA/OCED world energy production sources for 2015 [1]J:
And given the improvements in batteries and solar these numbers will continue to shift away from coal.Additionally, you could also invest in a solar setup at your own house and Tesla is working on converting Supercharger stations to solar [2].
[1] http://www.iea.org/publications/freepublications/publication...
[2] http://www.greencarreports.com/news/1096926_teslas-first-sol...
[+] [-] hetman|9 years ago|reply