Featured image: Tesla | Tesmanian
One of Tesla's main goals is to lower the price of electric vehicles in order to make them more affordable to the general public. One of the key reasons for the higher cost of EVs has been the cost of producing battery cells. At Battery Day, which took place on September 22, Tesla announced that it will be able to seriously reduce its cost to produce this critical element of EVs.
“We don't have an affordable car,” said Elon Musk. “We will have that in the future. But to do that we have to bring down the cost of the batteries."
This will be possible thanks to several components:
Improvements in each of these areas will allow the company to reduce the cost of producing batteries by a massive 56% $/kWh, compared to current prices.
Last year, Tesla's batteries cost $156/kWh to produce, according to consultancy Cairn Energy. According to experts, the price needs to drop to $100/kWh for EVs to be able to cost the same as gasoline-based cars.
If we start from the price of $156/kWh, and consider the improvements presented at Battery Day, the cost of producing Tesla batteries will be about $68/kWh. However, battery technology is constantly evolving, which may mean that at the moment, the cost of producing Tesla batteries may already be lower than presented by Cairn Energy. Considering this, we can safely assume that in 2-3 years, the cost could be significantly lower than 70$/kWh.
Achieving this cost-level makes it possible to create an affordable electric vehicle. That is why, during the presentation, Elon Musk made an announcement that within 3 years Tesla will present a $25,000 car.
Tesla Plans to Offer $25,000 EV Within 3 Years, Says CEO Elon Musk at Battery Dayhttps://t.co/df0kCioUOo— Tesmanian.com (@Tesmanian_com) September 23, 2020
The new 4680 tabless cell, has five times more energy, enables 16% more range, and harnesses six times more power. It also lowers the dollar-per-kilowatt hour cost of the battery by 14%. That is, the larger form factor is key, as it gives the battery significant advantages, and costs less to manufacture.
Although all technologies will be released in 18-36 months, Tesla retains its technological leadership in the industry, continuing to challenge traditional car manufacturers. The term of three years for Tesla's new technology is still shorter than the term of various other manufacturers in simply rolling out their first EVs. Tesla will likely maintain a competitive advantage for the foreseeable future.
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