Tesla Announces It Will Cut Battery Cost Per KwH in Half

Batteries. That’s the difference between the price of an EV and a gas-powered vehicle. The price of batteries. It’s also the main factor in a vehicle’s range. Regardless of how far a person travels 99 percent of the time, range anxiety still weighs heavily on potential buyers. While Tesla has demonstrated that its vehicle range requires efficiency drivetrains and other components, it all comes down to batteries.

It’s also the company’s chance to talk about its environmental mission. At the top of the event, CEO Elon Musk said, “this presentation is about accelerating the time to sustainable energy.” He added that to hit their mark there needs to be a 100x growth in batteries for EVs to achieve this mission and that “tera is the new gigawatt.”

Problem: Today’s battery factories can’t scale fast enough. In Musk’s words at Battery Day, the company would need 135 fully built out Nevada Gigafactories to make 20 terawatt-hours of batteries in a year that Tesla says it needs. The company needs the battery capacity if it expects to expand 30-40 percent this year and beyond.

So it’s no surprise that Tesla has bundled its Battery Day event with a stockholder meeting to announce that it has a plan to halve the cost per kilowatt-hour by building its own cells.

Part of the process has been to create larger, tabless cells than what was in the company’s original battery packs. The new 2170 cells are easier to manufacture, with fewer parts, and have a shorter electrical path length to reduce heat. Overall it’s a more efficient cell with five times the energy, 16 percent more range, and six times the power. It also leads to a 14 percent wattage per house cost savings. That’s where EV costs can start coming down.

The cells will start production in a pilot gigawatt factory at the Fremont factory location. Musk says it’ll take about a a year to reach the 10-gigawatt hour capacity for the pilot plan. The plan for the actual production is about 200 gigawatt hours.

Part of the production is dry coating the electrode. Musk reminded the audience that the company is still working out the kinks for this technology. “We’re not saying this is completely in the bag. There’s still a lot of work to do,” Musk said. The benefit is that the production would allow for a 10 times reduction in footprint and 10 times reduction in energy needed to produce.

Bringing battery prices down so that there is price parity for EVs in the same vehicle segment as gas-powered counterparts has long been a target by Tesla and other automakers.

In the factory itself, Tesla is working on manufacturing of batteries that requires zero stops in the system. The cells would continuously move along the line sort of like a highway but without traffic. “Tesla will absolutely be head and shoulders above everyone else in manufacturing” Musk said.

the company is also noting that can reduce the footprint of its factories saying it will be able to get a 75-percent drop in investment for those facilities. The goal is to get battery production a 100 GWh by 2022 and 3TWh by 2030. The reduction equals an 18-percent reduction in dollar per kilowatt.

Use of silicon for batteries was next. Typically it expands four times in the battery and severely reduces the life of the battery. Instead trying to change the silicon, Tesla wants to change the battery to support the material.

For the cathode, Tesla is moving away from cobalt to nickel. The price differential is about 15-percent less for the nickel battery over the cobalt in the cathode per dollar cost.

For cathode development, the company is moving to a more efficient process that reduces cost by 75 percent and uses zero waste water. Typically cathode manufacturing ends up with a wasted water. the company will build its own cathode facility in the United States. It’ll be part of the cell production plant.

This is a developing story. We will add to it as more information is announced.

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