TLDR version:
Current problem: Tesla has a battery demand constraint for vehicle and energy storage. Its goal is to hit 20 Twh. However, at its current pace, it would hit that goal only if it has 135 GigaFactories simultaneously producing Batteries……Which is kinda difficult.
Solutions: Continue partnering with battery producers, such as Panasonic, CATL, LG, but also create own batteries. Tesla will produce batteries at a cheaper cost and faster rate due to battery innovations in research and development for batteries, manufacturing, innovations in mining, and placement of batteries in car. Also, Tesla plans to produce a 25,000$ car. Lastly, they made a plaid version of the model S which can hit speeds of up to 200 MPH and 0–60 in under 2 seconds.
In Depth Version:
Tesla plans to decrease the cost/Kwh by 50%. I repeat. 50%
Cell Design:
Tesla literally increased the size of their current battery cells which will contribute a decrease of 14% towards lowering the cost per Kwh. Additionally, the only downside of larger cells is heat when charging, but with a breakthrough of a tabless cell, this issue no longer exists.
They’ve literally made a cell that costs less but has the same power output and smaller form factor and none of the side effects associated with larger cells.
Cell Factory:
Tesla was able to simplify the manufacturing process through both Tabless cells as well as Dry Electrode processing, reducing energy costs by 10x, saving factory space by 10x, and increasing battery throughput.
The ultimate goal is to reach 100 GWh by 2022 and 3 TWh by 2030 which is a compounding annual growth rate of 53%. Keep in mind, the average increase in battery capacity is usually only 5% a year, so 95% of this growth is coming from scaling up. This simplification in manufacturing and R&D will reduce costs by 18% per KWh.
Anode Materials
Tesla is using silicon to allow for range increases in batteries and this breakthrough in R&D allows for a 5% reduction cost per KWh. Tesla has partially solved the issue of silicon expanding in the battery by providing space for the silicon to expand.
Battery Cathode Materials
Currently a lot of lithium ion batteries rely on cobalt, which is expensive. However, Tesla plans to use more Iron, which is cheaper than nickel and cobalt in lower range vehicles, use nickel manganese cobalt batteries in long range consumer vehicles, and high nickel batteries in weight specific vehicles, such as Tesla Semi and Cybertruck which are expected to tow a massive amount of payload.
This diversification in battery composition will allow for cheaper vehicle costs as well as the ability to create a more diverse set of vehicles, allowing Tesla to expand in market share in the long term with access to different market segments.
Furthermore, Tesla was able to simplify the mining process of lithium and processing of metal sulfates for batteries. Essentially, they’re able to use table salt to gather widely available lithium, harness it, and recycle previous batteries for materials. This ultimately will result in Tesla being able to create electric vehicles 100% sustainably.
Thus, this will result in a 12% reduction per KWh.
Cell Vehicle Integration:
Due to Tesla’s prior investment into a machine called a Gigacast, they’re able to create a large casting of the car body and reduce the number of parts by 370, reduce weight, and increase range (due to battery placement).
Also, Tesla plans to use the large cells as support for the vehicle rather than adding support for the cells, making room for more cells as they’re removing excess non battery material from the car. Thus, this will increase energy range for the car, reduce manufacturing costs (simplification in this cell to body design) and reduce factory footprint
From this innovation, Tesla will reduce costs by 7% per Kwh.
Golden Nuggets of Extra Info:
With these battery improvements, Tesla plans to produce a 25,000$ vehicle, which will undercut competitor costs and advance the transition to sustainable energy. This will beat competitors, such as Nissan, GM, Audi, Mercedes, Toyota, Ford, etc and provide Tesla with a greater Moat as they are able to garner more value from customers in the form of software later on.
Another car that they have announced is the Plaid model S, able to accelerate to 60MPH from 0 in under 2 seconds and reach speeds of up to 200 MPH, conquering any internal combustion engine.
Musk however, couldn’t convey this great advancement to idiots on wall street. Tesla stock is currently down 10% after hours. Great time to buy in.
