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Battery Cost can only Rise?

Battery Cost can only Rise?

I was reading a blog today and this persons opinion is that the $ per kW costs of battery's can only go up drastically. At least that's how I read his blog and replies.
http://seekingalpha.com/?source=yahoo#article/468591-new-research-dissec...

His math seems to me to be a little messed up. If a Tesla 85kW battery costs $40k wouldn't that be around $500 per usable kW in the battery pack? (I am rounding off and completely guessing) Lets get extreme and say the whole cost of the 85kW car is the actual cost of the battery and Tesla is losing money. That would be around $600 per kW in today's tech.
This author is claiming that future battery packs (2020) will cost at least $800 per kW or over $1500 per usable kW because the rare earth metals in Tesla's futures batterieswill cost that much. Yes in a reply to his own blog he claims he knows which battery Tesla is going to use. This guys got the inside scoop or is that poop!

Personally I find these kind of blogs a joke and don't bother replying to them because you won't change the minds of the haters. It's easier to post my annoyance here and get true feed back then feel better after reading your replies.

Jason S | 30. März 2012

"This guys got the inside scoop or is that poop!"... yeh, I'm gonna go with "poop" on that one. He's full of it.

Lithim ion tech won't go forever. It'll get replaced soon-ish. Depending on your definition of soon.

Here's a link that'll prolly work for others:
http://seekingalpha.com/article/468591-new-research-dissects-lithium-ion...

Jason S | 30. März 2012

Wait, sorry, only skimming the article but where are you reading that prices are going to go up? Maybe you're the one that has things wrong...

Here's a quote from near the end of the article:
"Lux is currently forecasting a 50% reduction in battery costs over the next eight years in the most likely scenario, which works out to an aggressive but attainable improvement of five to six percent per year."

And that seems about right. So how are costs going up again?

ThomasN | 30. März 2012

Check out his other numorous articles and you'll quickly assess his motivation. One is very specific about shorting tsla.

BYT | 30. März 2012

That guy will not be able to afford his domain name renewal with his philosophy's then in about 9 months... ;)

Sudre_ | 30. März 2012

Jason, Tesla's battery cost per kW is far cheaper than what he has on his chart. I'm guessing $400-$600 per kW. His chart shows lithium ion costs well over $1000 per kW for a battery pack in the future much less now. He misrepresents data. In his comments he says the cost of the raw materials will go up which Lux did not take into consideration.

off topic,
I am having a hard time connecting today so I may have to give up for the evening.

Jason S | 30. März 2012

I just don't see it. I don't see the rising cost chart you are talking about. I don't see anything saying that costs are expected to rise. He digs at green cred with the old saw about solar panels giving power at same time as car uses power but doesn't consider power usage/grid as a whole (like power production can be turned off/on at a moment's notice). He uses book value to compare stock valuation like there is only that metric to consider.

It is slanted and biased and pretty worthless article.

But I don't see where he says prices are expected to rise.

Soflauthor | 30. März 2012

Slightly OT, but it truly is aggravating to read many of the blog posts at seekingalpha.com and other financial sites. The posts contain blatantly erroneous and misleading anti-EV and anti-Tesla "facts." The writers don't understand the tech, don't understand TM's overall business strategy, don't state simple facts correctly ... it's a classic example of how bad info can be promulgated via the Web.

I have to suspect that most of the writers are short on TSLA and are trying to shape market moves -- e.g., the bricking story, the Tesla is running on user deposits story, blah, blah. Pathetic, but also troubling.

Robert.Boston | 30. März 2012

Petersen isn't long or short TSLA, but he is long in Axion, a PbC battery company that wants to see a stop-start technology for "micro-hybrids" win the game.

I enjoyed the point where JP critiques Secretary Chu's goals for battery development as unrealistically lofty. When a lawyer tells a Noble-laureate physicist what is or is not achievable in the physical scientists, then you know you have a hack writing the article.

Robert.Boston | 30. März 2012

scientists -> sciences

toto_48313 | 30. März 2012

Softauthor : "I have to suspect that most of the writers are short on TSLA and are trying to shape market moves -- e.g., the bricking story, the Tesla is running on user deposits story, blah, blah. Pathetic, but also troubling."

I think that gas industry is watching closely TESLA, and as Tesla is about to succeed now, they started being scare, and do what they can to stop TESLA to succeed. Hopefully they won't be able to.

David M. | 30. März 2012

JP has been beating the anti EV, anti Tesla drum for a long time. He seems to post at least one anti article a month. He has lots of followers who are shorting Tesla. However, ironically, he claims he does not short the stock. I believe he's based in Switzerland, so he's indifferent about America's dependence on foreign oil.

I agree with Robert.Boston, I wouldn't be surprised if he was being paid to hype the "Start-Stop" technology.

CIAOPEC | 30. März 2012

+1 David M

The article is just more verbal diarrhea from JP. You would think Seeking Alpha would have an interest in vetting their contributers and to get the facts straight.. The only reason I read these articles is because they pop up on my iphone and ipad (within the stocks app and on Zite) on a regular basis. ( i would actually guess 1-3/month). Its almost like you can guess with 100% accuracy who the author is based on the title and anti-EV rhetoric content of the article. Hmm, for someone with no disclosures to make the guy seems to be on a mission...

John Petersen asserts he has nothing to disclose which is patently false. As a few Tesla forum members have pointed out the guy has an interest in battery tech that may be obsolete ( or at least threatened) once EV's catch on. It would also not be a surprise if he shorts TSLA stock as well.

I had a good chuckle when someone renamed one of John Petersen's recent articles "Electric Drive - Still Crazy After Five More Years" to " John Petersen -Still Crazy After Five More Years"

I couldn't say it better myself

Mark K | 31. März 2012

To reinforce what's been said -

Despite Petersen's chronic bias, in his latest article even he concedes that LiIon battery costs will decline, not increase.

Petersen's writings show a clear history of selective reporting and distortion. For example, he wrote earlier that even if LiIon batteries get better, EV's won't be practical because inadequate rare earth mineral supplies will prevent EV motor production.

He wrote this even after TM had delivered roadsters with AC induction motors that use no rare earths. The Model S uses the same technology. He had to have known this fact.

Petersen is either:

A. a moron, with no grasp of the subject, or

B. A crook, who's trying to shore up his legacy lead-acid stock interest.

My guess would be ..uh.... both.

Volker.Berlin | 31. März 2012

This author is claiming that future battery packs (2020) will cost at least $800 per kW or over $1500 per usable kW because the rare earth metals in Tesla's futures batterieswill cost that much.

http://www.teslamotors.com/forum/forums/no-rare-earth-metals-model-s
'nuff said.

Nick Kordich | 01. April 2012

@Volker.Berlin - In the article, Petersen didn't claim there were rare earth metals used in Telsa's batteries. What Petersen did say is that future batteries could cost less per kWh in part because of chemistries dependent on more expensive/rarer minerals, specifically cobalt and manganese, and he claimed that Lux's study didn't take that into account because it only looked at historical price trends for lithium ion batteries. Here's why I disagree:

First, the Lux study was based on historical trends in which alternate battery chemistries were big factors, so Petersen isn't foreseeing some secret risk they missed. Manganese and cobalt were part of this trend in the past. If anything, he should argue that the curve has turned downward more sharply than it would have otherwise because of the elimination of those metals from lithium nickel batteries. However, that's again missing the point, as both past and current predictions and historical trends took this into account and Petersen isn't adding anything new in his 'analysis'.

Second, this article is looking at the short term, not even ten years into the future. While it is true swapping out anode metals in that time could result in cost savings in a short turnaround time, it doesn't really depend on it. Over the next seven years, the biggest factor in reducing cost may be doing nothing with the chemistry, just refining the manufacturing process. It's more likely to be new designs and manufacturing techniques than rare metals that offer a revolution, but the same is even more true of battery evolution. It won't grab as many tech or investment blog headlines, but it seems to me that's what is going to have the greater short-term effect.

Nick Kordich | 01. April 2012

A couple more thoughts on predicting future prices of lithium ion batteries:

Future R&D investment is being done with an eye toward their possible applications/markets. Or put another way, nobody's sinking money into lithium-unobtainium batteries. Given that electric vehicles are going to be a major market for the industry, they're performing research with economies of scale in mind. And, as the demand for large battery packs are factored into research, whether you're talking hybrid, PHEV or BEV, expect to see improvement in supporting systems as well as the cells.

One of Petersen's arguments is that decreasing the cost of cells doesn't decrease the cost of the rest of the battery system, and he claims that this means a battery EV would see less return in cost/kWh than a hybrid. Leaving aside that potential future batteries might be developed with EVs in mind and so be a better fit to that role, large battery packs and their support systems (such as the thermal regulation in Tesla battery packs) are far newer an application than batteries in other roles. As a result, while Petersen assumes they're a constant, I think at least some of these costs could fall even more quickly than the cell cost as Tesla refines the other systems that make an EV possible.

A rule of thumb in engineering (if not life in general) is that doing anything the second time is easier. If that's true going from the Roadster to the Model S, it's bound to be more so for the Model X and Bluestar, since the Model S is in many ways Tesla doing things for the first time. The battery thermal management system, structural engineering, electric motor design (as we're already hearing about in the advantages of the two motor approach in the Model X) and other things are what are learned by doing.

On one of the blogs, I recall reading someone bringing up Henry Ford's approach (in contrast to Fisker). What most people miss in the romanticized version is that Ford used up all his capital during the development of the Model A, and had to sell it at a significantly higher price than Oldsmobile's car. Though he was outsold, Ford stayed in business. Ford raised his prices to increase his margins, topping out with the Model K, which sold for $3,000 - adjusted for inflation: $80,000; compared to the ratio of the average white collar salary, closer to $120,000. This allowed Ford to turn to the lower priced models he hoped to build, bringing with him a reputation for quality. Even so, the Model T was introduced at a price higher than the original Model A, just more practical. It was only with years of refinements in production method that the company gained by experience they could only acquire by producing the Model T that the price was able to be brought down so low that Ford no longer needed to advertise.

And one more thing on predicting costs: In 2005, Toyota predicted they'd be able to cut the costs on a hydrogen fuel cell system by 95% by 2015. Last year, they updated their estimate, considering the time they had left and the progress they had made so far. By 2015, they expect to have reduced the cost by 90%. The moral of the story: even with a massive shift in cost, the experts in the field had a pretty good guess. I can't keep from making it sound like an ad hominem, but Petersen is a lawyer who happens to speculate on the energy market. While he's been successful making the safe bet that any given high-tech company may fail, I think the long-term bet against progress given the trend we've been seeing in hybrid acceptance and the promise of a more mainstream Tesla EV coming to life in the Model S, his skepticism that the whole industry's misguided in EVs being at least a viable segment seems rather silly.

By the way, Toyota's fuel cell vehicle is still expected to sell for €100,000 in 2015, and mile for mile, the electricity alone needed to create hydrogen is more expensive than it takes to drive on gasoline at current rates, even without a hydrogen infrastructure to pay for. As a result, I'm not looking for a hydrogen solution any time soon, especially with the battery EV approach so much more accessible. However, taking my own words to heart, I'll leave a little room for the possibility that Toyota knows something I don't.

Nick Kordich | 01. April 2012

Okay, sorry about that - my screed didn't look nearly as long in the text edit field, but as Volker said, 'nuff said. Cheers and good night, all.

Brian H | 01. April 2012

Nick;
Nothing wrong with screeds, when they have something to say! :)

jackhub | 02. April 2012

Fred Smith, CEO of FEDX was interviewed on National Public Radio this morning. The Subject was energy use. He said FedX is implementing a strategy for more effectively using energy. One action will be to convert their local delivery trucks to all electric. Mr Smith says they can reduce operating costs fot the local truck fleet by 75% by convertin from internal combustion engines to all electric vehicls! He said "no, that's not 7.5%, that's 75%." Furthermore, he said that over the next 5-6 years, the cost of bateries will decrease by 40-50% and the range will double. He says FedX over-the-road vvehicles will be converted to natural gas.

Mr. Smith does not get paid for moving his mmouth. He gets paid for operating one of the largest truck fleets in the world . . . at a profit! That's a nice vote for EVs.

BYT | 02. April 2012

I wonder how those FedX trucks will get the range they need as I am pretty sure they do well over 300 miles a day? Just curious? Do they part them at the HUB for lunch to recharge and take them out again?

Ohms.Law | 02. April 2012

Bigger batteries, don't you think?

Ohms.Law | 02. April 2012

BTW that is indeed good news from Fred Smith.

BYT | 02. April 2012

At some point the extra weight of the bigger batteries would diminish returns, would it not?

BruceR | 02. April 2012

A competing viewpoint from the Lithium manufacturing industry:
http://www.idc-ei.com/getdoc.jsp?containerId=prUS23276912

Brian H | 02. April 2012

BYT;
Linked to an article on this in General (where this topic belongs) noting the trucks will have 100 mi. range with 12 tons gross weight. In-town deliveries don't need higher mileage.

BYT | 02. April 2012

Thanks, I guess they go far less then I had estimated!

Tom A | 02. April 2012

You can see my comments at the end of that article, since my moniker is the same there. I'm not sure how great of a job I did, but I realize now that I can't reasonably argue with someone that seems to equate such strong, irrevocable language like "impossible" with phrases like "currently not cost effective."

Call me naive if you like, but I have nothing but contempt for the modern vogue of extracting ethical principles and moral conviction solely from a cost-benefit analysis. I realize you can't expect a company to do something at a loss, or expect the gov't to prop up every venture. That's not the point.

What is worse, is when these analyses have no choice but to rely on attempting to quantify such intangibles as potential technological growth, fickle market shifts and political winds, and environmental/medical externalities, no matter how well researched and diligent the study author tries to be.

We're talking about a speculative industry that is in its infancy. If you are not familiar/comfortable with the technology, the current trends, the competition, past successes and failures, then the likes of JP aren't any help, nor is anyone else, really, and you'd be smart to put your money elsewhere.

In my case, I never bought stock in my life. After following the EV/hybrid industry assiduously ever since the first Roadsters were delivered, I thought the time was right for a safe bet on Tesla Motors right after the market reacted to Rawlinson's retreat to England. My modest 100 shares are doing just fine, and if Tesla continues to make milestones and fulfill promises, then I look forward to selling my stock as a gift to myself, that should cover a $5k deposit when the time is right for me to go electric.

In the meantime, my 2010 Mercury Mariner hybrid is serving me well, being a mid-sized, boxy SUV averaging 36mpg over two years in the Mid-Atlantic Region.

MichaelN | 02. April 2012

Has anyone seen the Envia battery report - (torquenews.com/1075/envia-systems-battery-breakthrough-affordable-300-mile-range-electric-cars)

According to this report L-ion batteries at twice the density and 1/4 the cost are around the corner - Imagine our Tesla(s) with 600 mile range, and less worry about replacement costs - It may be that the technology is different, but Tesla is adaptive -

It does concern me that GM is involved, after seeing what happened to the EV-1 - but hope springs eternal as they say

Tesla - any comments on this breakthrough?

BYT | 02. April 2012

I still think Super Capacitors are the way to go!

Brian H | 02. April 2012

BYT;
total storage, and SIZE! Caps are huge compared to batteries. You'd have a 2-seater Model S. ;)

Brian H | 02. April 2012

The link to PolyPlus says:

The PolyPlus lithium-water battery has achieved the highest recorded energy density of 1,300 Watt-hours/kilogram, or an almost 10x improvement over current lithium-ion batteries.
...
The breakthrough technology is what PolyPlus calls a "protected lithium electrode" (PLE), that remain stable in a broad range of electrolyte solutions. The PLE technology encapsulates lithium metal sealed in a a solid electrolyte. The electrolyte is conductive to lithium ions, but impervious to liquids and gasses, keeping the water or air from touching the lithium.

2000 miles per charge, here we come!

BYT | 02. April 2012

Not that much bigger and we would still need batteries I think to offset the caps a bit for a pure EV hybrid perhaps?

http://cleantechnica.com/2012/01/31/ioxus-announces-new-ultracapacitors/

Things to build on/from... cheers to the future... ;)

stephen.pace | 03. April 2012

This topic should probably be moved to the general forum. At any rate, I attended the Lux Research webinar today with Kevin See presenting:

http://www.linkedin.com/pub/kevin-see/15/b06/b03

I don't want to do an entire review here, but two points from the talk:

1) Given the production ramp up, Dr. See suggested there is a real danger of oversupply. I'm guessing this would be bad for battery companies in the short term (e.g. there would be a shake up as prices fell), but potentially great for consumers as they could get EVs for substantially less if the bottom drops out of the LI-ion battery market. He didn't really address that point, perhaps because the talk was focused on the EV market 8 years out.

2) Similar to JPs charts, the cost per kWh of the battery technologies that the Lux Research charts show seem to be greater than the cost that Tesla is paying now. Fair enough, since batteries like the Prius use are significantly more expensive; however, he didn't really address Tesla's approach of using 18650 form-factor laptop-type LI-ion cells (with automotive improvements). I would have thought it merited at least a brief discussion given the costs appear to be lower at the moment. Given his point that cost is the most important factor in widespread adoption, it seems like incremental battery improvement we've seen over the last 10 years COULD support lower cost EVs by 2020 that use this alternative approach. By contrast, he suggested that for us to reach $200 per kWh by 2020, while it was possible, many, many things had to go absolutely right from increased production, to improved anodes, cathodes, and electrode thickness, to other factors including the reduction of capacity fade to 10%.

Lux said if your question wasn't answered to write them directly, which I did, so if I hear anything back, I'll share it.

Brian H | 03. April 2012

Is he elderly?
Clarke's Law #2:
When a distinguished but elderly scientist states that something is impossible, he is very probably wrong.

stephen.pace | 03. April 2012

No, that's why I posted his LinkedIn profile. :-) But to be fair, he didn't say it was impossible, just that a lot of things had to go right for it to happen.

Thumper | 03. April 2012

With apologies to Yogi Bera, It's not a breakthrough til it's a breakthrough.

Brian H | 04. April 2012

stephen;
no pic, no b/d on his profile. That's why I asked. :-p

LOL
Is he exceptionally ugly? Why so shy?
:D

Volker.Berlin | 18. April 2012

autobloggreen: "Advanced vehicle battery costs dropped 14% in the past year; down 30% since 2009"
http://green.autoblog.com/2012/04/17/advanced-vehicle-battery-costs-drop...

Teoatawki | 18. April 2012

Interesting (or scary) is their current number suggests over $58K for an 85kwh battery pack.

Timo | 19. April 2012

Lowest price for Panasonic NCR18650A (3.1Ah) was $6 for 100 minimum order. That makes battery cost for 85kWh pretty close to $45k. Because you need thousands of those to make just one battery pack I bet Tesla gets them a lot cheaper than that.

Volker.Berlin | 09. Mai 2012

autobloggreen: "Lithium ion battery 'overcapacity' could arrive by 2015, would push prices way down"
http://green.autoblog.com/2012/05/07/lithium-ion-battery-overcapacity-co...

It must be added that this is pure speculation by now. If there is anything to the story then battery makers will adjust production accordingly so the effects will most probably be softened. But it shows that there are forces that have the potential to drive battery prices down.

Epley | 09. Mai 2012

Anyone can write a blog. Anyone can express their opinion. It doesn't make them correct, and just because it's written doesn't make it true.