Elon Musk reveals plans to cut electric battery costs, build $ 25,000 Tesla

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Tesla officials, led by CEO Elon Musk, on Tuesday presented an aggressive set of plans to cut battery production costs, which they say will allow Tesla to market a $ 25,000 battery-electric vehicle. here three years.

These are two of the main takeaways from the company’s Battery Day, a demo session following its annual meeting. During the three-hour event, which was broadcast live from a site at Tesla’s assembly plant in Fremont, Calif., Musk and other executives explained in detail how they planned reduce the cost of batteries – the most important and expensive part of an electric vehicle – by 56%. They then revealed a variety of new product programs that will be launched over the next few years.

“We’re confident that we can build a compelling $ 25,000 electric vehicle that is also fully self-contained,” Musk said.

“The battery material is clearly revolutionary and essential to Tesla’s goal,” Musk said, “accelerating the [transition] to sustainable energy. ”

Battery costs have fallen dramatically over the past decade, from around $ 1,000 per kilowatt hour in 2010 to less than $ 150 today, according to research conducted by analysts at the Boston Consulting Group, AlixPartners and others. For their part, few manufacturers will discuss concrete figures, considering that the cost of batteries amounts to a state secret for the automobile.

The downward curve has “flattened,” Musk said, and will need significant breakthroughs to descend even lower. According to many experts, the figure will need to reach nearly $ 70 per kilowatt hour before battery-electric vehicles, or BEVs, are truly competitive with vehicles using internal combustion engines. For a vehicle like a Tesla Model S Long Range, with a 100 kWh battery, the savings would amount to about $ 7,000 per vehicle.

To get there, said Drew Baglino, senior vice president of Tesla Powertrain and Energy Engineering, the company is reinventing virtually every element of the manufacturing process, partly borrowing ideas from the bottling industry – which runs its lines. fluid and continuous production, rather than one bottle at a time.

The changes Tesla says he’s developing begin with revisions to basic chemistry. Its next-generation batteries will eliminate expensive cobalt and rely on various formulations of iron and nickel on the one hand, while its cathodes will switch from graphite to silicon. The batteries will be a bit bigger, Baglino said. But, more importantly, they will use new production methods, such as applying dry powders, rather than slurry, to the tightly wound films inside lithium-ion batteries.

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Tesla believes the process will allow it to massively reduce the size of future battery factories and eliminate many production steps. In the space currently used to produce 150 gigawatts of batteries, Musk said, the company expects to be able to produce one terawatt, an increase of almost 700%, even with reducing its investment.

Not only will batteries be cheaper, they’ll also pack more energy – “energy density” in EV parlance, Tesla said. This would either result in a double-digit increase in range or the need to use fewer batteries in vehicles which would further reduce its cost.

This would allow Tesla to finally produce a car that could be within reach of mass market buyers, Musk announcing, “We are confident that we can make a compelling $ 25,000 electric vehicle that is also fully autonomous.

He suggested the product could hit the market in about three years, around the time Tesla plans to fully ramp up production of its next-generation batteries, although limited production could begin in about 18 months.

Whether Tesla can deliver is a big question though. The automaker has often missed its production and price targets. It never really delivered the base $ 35,000 version of the Model S sedan it had long promised. And while Musk on Tuesday announced his intention to deploy an almost entirely hands-free version of the company’s autopilot system, he’s also well overdue.

Although Tesla has yet to prove that it can be successful with low-cost electric vehicles, it has had no problem finding ways to launch increasingly expensive niche versions of existing products. Next year that will include the Plaid Model S, the most capable version of its flagship sedan to date, he said.

Originally called itself Maximum Plaid, an obscure reference to the movie “Spaceballs,” the sedan will deliver over 1,000 horsepower and launch from 0 to 60 in under 2 seconds, Musk said. It will offer an equally breathtaking price tag, $ 145,000, in line with comparable extreme machines from BMW and Mercedes-Benz.

Musk hinted at a third new product, a scaled-down version of the upcoming Cybertruck pickup designed for international markets. The initial truck, which will be primarily destined for the United States, has already generated at least 600,000 reservations in advance, Musk said, adding, “We’ve stopped counting.”

The lengthy presentation by Musk and other Tesla executives failed to address several things that were expected. There was no mention of batteries that could last 1,000,000 miles, which Musk had previously teased – although the new technology is clearly expected to outlast today’s batteries. Meanwhile, the issue of charging times, a clear barrier to widespread acceptance of EVs, has been largely ignored.

Wall Street investors weren’t impressed. Tesla’s stock slipped early Tuesday when Musk revealed that new battery technology was still a long way off. Stocks fell nearly 7% in after-hours trading.

One clear concern is that competitors are running to achieve similar goals. General Motors, in a rare move, revealed it was paying around $ 145 per kilowatt hour for its Chevrolet Bolt EV batteries, but said it expected to hit $ 100 when its Ultium battery plant in the Ohio will launch next year. CEO Mary Barra and other officials have hinted at long-term plans that could bring it down to around $ 70.

Meanwhile, a new competitor, Lucid, says its Air sedan, an alternative to the Model S, will achieve a range of up to 530 miles next year, about 30% more than the Model S at long range. , with only 10% more battery.

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