There was a lot of expectation for Tesla’s Battery Day this year, but nobody quite realized just how significant the announcements would be. I predicted a number of the technologies presented a few weeks ago. However, Tesla CEO Elon Musk combined these with others not released before to promise a reduction in the cost per kWh of batteries of over 50%. This would be a phenomenal achievement and way beyond current predictions for the industry. It could lead to a revolutionary reduction in EV pricing.
The route to much cheaper Tesla batteries isn’t going to be from one single technological development, but from improvements in five key areas – cell design, streamlining of the factory making the cells, innovations in the anode materials, altering the cathode materials, and finally changing how the batteries would be integrated into the car. As predicted, Tesla is clearly getting heavily into the battery business, and will be manufacturing a lot of its own cells in the future. But nobody quite predicted just how much Tesla’s plans could alter all aspects of how the battery is made and integrated into the car, pushing the cost curve much lower, much sooner than analysts have been suggesting until now.
The first announcement was in the design of battery cells, focusing around removing the tab and changing how the “jelly roll” of the cell is packed into the casing. Tesla has already increased the energy stored in each cell by moving from the 1865 type used in 2008 to the 2170 type introduced in 2017, which is a bigger, longer cylindrical cell (21mm diameter instead of 18mm and 70mm long instead of 65mm). Tesla will be introducing a shingled design for packing the anode and cathode together. This enables the use of larger, 46mm diameter cells that are 80mm long. These can store five times as much energy as the 2170, enabling Tesla’s cars to have 16% more range, and can deliver six times the power.
This development on its own would reduce the battery cost per kWh by 14%, according to Musk.
The next area of improvement that Musk and his team announced was in how the batteries will be produced. This was an area I had seen coming, revolving around the acquisition of Maxwell Technologies, which has developed a dry process for electrode production instead of the traditional wet process. This removes almost all the stages of electrode production, reducing the factory footprint by a factor of ten, and the energy required for production by the same amount. Tesla also talked about improvements in the formation stage of battery production that would lower investment costs by 86%, which seemed to be linked to technologies acquired with Hibar Systems. These enhancements together would enable the company to fit a factory able to produce 1TWh of batteries a year into less than the current space of its Gigafactory, which can only produce 150GWh a year.
Musk did admit that although the Maxwell process has been through four major updates since the Tesla purchase, it wasn’t yet ready for full production, and would probably need two or three more iterations. But these production enhancements would reduce the cost per kWh by 18%, taking the total reduction to 32% per kWh.
Musk and team talked next about innovations in anode design, using silicon instead of graphite because it can store nine times as much lithium as graphite. Although there is a lot of concern about how much lithium is required for battery production, Musk argued that it was the most abundant element in the earth’s core after oxygen. In fact, he said that just Nevada had enough lithium to convert all the cars in America to EVs. The problem with using silicon is that it doesn’t last well through multiple charge-recharge cycles due to expansion, and traditional methods to combat this are expensive. So Tesla intends to use raw metallurgic silicon instead, and stabilize the surface with an elastic ion-conduction polymer coating that can cope with expansion.
This enhancement would lead to a 5% reduction per kWh – perhaps not as much as other areas, but it all adds up, bringing the overall total reduction to 37%.
In previous articles, I’ve talked about the use of Lithium Iron Phosphate (LFP) batteries instead of Lithium Ion, which Tesla is already taking advantage of in partnership with CATL. These have the advantage of not relying on expensive, controversial cobalt. But they also don’t have quite as much density as Lithium Ion, so are better suited to static applications such as house batteries, where size and weight aren’t so important. Instead, Tesla announced that it will be using more Nickel in its cathodes, eventually leading to the complete removal of cobalt. This will reduce the cost of cathodes by 15% per kWh. Tesla also plans to simplify the production process considerably, leading to a 76% reduction in process cost. This would have added benefits of using recycled water leading to no waste and enabling the use of more sustainably mined and sourced ores, with greater opportunities for recycling.
The overall reduction in cost from the new cathodes and process enhancements would be 12% per kWh, bringing the total to 49%.
Making the Cells Structural
The final enhancement took us out of pure battery developments toward another area I already talked about in my previous article – car manufacturing. It is already common knowledge that Tesla has been working on casting very large parts of its cars in one piece, and allegedly has the largest metal casting machine in the world. It has had to develop new alloys to enable the casting of such large custom metal shapes. But now the front and rear of the car can be casted as two large pieces. The novel element here is that Tesla will no longer be placing its batteries inside holding structures but bonding them directly to the chassis, so they form part of its strengthening structure. Musk even argued that this would enable an electric convertible to have a stiffer chassis than a current hard top. He likened this to the way aircraft moved from having separate fuel tanks inside the wings to the wings actually being the fuel tanks. But while aviation fuel is fluid, batteries have stiff casings that are ideal for becoming part of the structure. This reduces mass by removing surplus extra structure and could enable a 14% increase in range.
This final element would add another 7% saving in cost per kWh, taking the grand total to an amazing 56% lower battery pricing.
James Frith, head of energy storage at BloombergNEF, recently stated that EV batteries currently cost $147 per kWh, predicting that this will reduce to $61 by 2030. However, Musk claims that Tesla’s developments would take 18 months to start realizing advantages, and three years to fully come online, which would mean Tesla could be producing batteries at a cost of $70-80 per kWh by 2023, significantly below the $100 per kWh that was previous predicted for that timeframe by BloombergNEF.
Musk also announced that the promised reduction in battery costs would enable what he called “a compelling $25,000 car that is also fully autonomous”. He wouldn’t be drawn on the name, although some event attendees were already calling it the Model 2. Either way, if Tesla delivers on these promises, it will be hard to see how other automakers can compete, considering how much of an EV’s cost comes from batteries. They must be very worried indeed how they can produce anything to compare with what Musk presented at Battery Day 2020.