This is a link to an article from March 15, 2016. A couple of weeks or so prior to the Model ☰ Reveal Part I. It is a pretty good article. Below are my thoughts on it.
How Soon Can Tesla Get Battery Cell Costs Below $100 per Kilowatt-Hour?
I think it was some time in 2014 that Elon Musk noted he would be sorely disappointed if it took a decade to get their internal cost to $100 per kWh. Yes, some speak of cost per battery cell, while others are specific to battery packs. It is definitely best not to mix the terms, but some are not so specific as to which they mean. I figure that ambiguity is introduced on purpose.
Over the last three years or so, I have seen articles that claimed Tesla's internal cost was as much as $240 per kWh, and as low as $180 per kWh. This is the first indication I have seen that their internal cost might be as low as $150 per kWh at the pack level, already, ahead of Gigafactory production. I think Elon has been careful not to say either 'pack' or 'cell' in his statements -- not that it matters much, as traditional automobile manufacturers had been saying they cost around $500 per kWh. That had prompted me to think perhaps they were getting their automotive battery cells from LexCorp, perhaps.
Only very recently has General Motors let slip their cost at the battery cell level is $145 per kWh, which apparently angered LG at its public revelation. According to this article, that means GM would be paying perhaps $174 per kWh at the pack level to supply the Chevrolet BOLT. Thus, it's 60 kWh battery pack represents roughly $10,440 of the build cost for that $37,495 EV.
If the rumored amounts for Tesla are at the pack level though, things are a bit different. Because Elon has been positive for quite some time now that the absolute minimum reduction in their internal cost would be 30% from the outset. So, even if their cost had been as much as $240 per kWh, they would be reduced to 160 kWh instead -- $14 less per kWh than for Chevrolet BOLT at its best. Meaning a 60 kWh battery pack would be only $9,600 as an installed cost within a $35,000 car.
Even happier for Tesla, if their internal cost is as low as $180 per kWh already, a further 30% reduction would result in a $120 per kWh immediate cost through the Gigafactory. Making a 60 kWh battery pack cost them only $7,200. And if as this article suggests, Tesla's current pack level pricing is as low as $150 per kWh already, that means a 1/3rd reduction would put them at $100 per kWh from the very moment the first Model ☰ battery pack arrives at Fremont from the Gigafactory. Making a 60 kWh battery pack cost only $6,000 -- that's a $4,440 savings compared to GM's operation -- and pretty much absolutely guarantees profitability for the Model ☰ even if Tesla chooses to stuff the largest conceivable battery pack into its frame that they can manage at a $35,000 price point.
Since the Model ☰ Reveal Part I in late March 2016, Elon has said he does not foresee a need for an entry level vehicle below that car in their lineup. So, all those who have been hoping for an analog to a Toyota Corolla, Volkswagen Golf, Ford Focus, Chevrolet CRUZE, Hyundai Elantra, Kia Forte, Honda Civic, Nissan Sentra, or whatever can just forget about it... Along with those who practically demanded a short range 'cheap car' built like a Ford Fiesta, Chevrolet SONIC, Nissan VERSA, Hyundai Accent, or Kia Rio. The Model ☰ should be able to hold its own in worldwide sales, not just against direct competitors such as Acura TLX, Alfa Romeo Giulia, AUDI A4, BMW 3-Series, Cadillac ATS, Jaguar XE, Infiniti Q50, Lexus IS, and Mercedes-Benz C-Class... But also against those cars that will certainly move further up-market in the coming decade, such as Toyota Camry, Honda Accord, Nissan Altima, Chevrolet MALIBU, Ford Fusion, et al. All this, while simultaneously eating away at the higher end cars like AUDI A6, BMW 5-Series, and Mercedes-Benz E-Class.
This is going to be beautiful to behold.