Good things happen to those who wait. After being postponed due to the Covid pandemic, Tesla Battery Day is finally here. Elon Musk has, of course, been stoking worldwide frenzy by promising something “big” and “exciting”. So what can we expect from this masterful and masterly disruptor? Musk has already made teasing mention of batteries that will “blow your mind”, created a buzz with his Roadrunner battery cell production facility, and left competitors scrambling with his silver-bullet Model S. And let’s not forget his public announcements of Tesla’s intention to build an entirely new ecosystem populated by passenger vehicles, second life residential / commercial battery applications, and robo taxis.
Hype and hyperbole aside, what “blow your mind” announcements can we expect from Musk tomorrow? Here is my crystal ball gazing overview:
Battery Technology: Tesla’s battery technology has leapfrogged generations in terms of energy density and cost-competitiveness. The company has historically worked with Panasonic but has now strategically expanded its options by partnering with LG Chem and CATL, among others. This move looks set to echo Tesla’s trajectory in the AC propulsion field where it partnered initially with Toyota before branching off to develop its own in-house technologies.
Despite question marks thrown up by the ongoing US-China face-off, I believe that Tesla’s million mile battery with Chinese battery maker CATL and the research lab at Canada’s Dalhousie University could be the catalyst that helps Tesla develop a battery technology that is its very own. This will mean a shift into a wholly new technology space characterized by no/minimal use of cobalt and nickel. Maxwell Technologies, a company that Tesla acquired in May 2019, could play an important role in advancing its battery tech portfolio.
#Blow-your-mind: The Roadrunner project could see Tesla unveiling its own customized battery technology cell design with a form factor bigger than 21700. This will likely be for the semi- and the roadster, i.e., applications of more than 200kwH.
There’s also the matter of Tesla’s changing cell chemistry. I expect several permutations / combinations: maybe a hybrid solution that incorporates the work being done at Dalhousie University’s research lab in Nova Scotia with major breakthroughs from Maxwell Tech.
Battery Manufacturing: From centralized operations, Tesla is diversifying into giga-factories / manufacturing in China (through LG Chem) and Berlin. I’m partially betting on an announcement tomorrow about Tesla donning the hat of a cell + battery supplier and joining the ranks of BYD, currently the only company that does the range from cell to battery development to production. So far, the cell + battery has been the only major element missing in Tesla’s vertical integration strategy. If Tesla demonstrates the capability to design, develop and produce its own batteries, it will exemplify the holy grail of vertical integration in the EV industry.
#Blow-your-mind: Updates in Tesla’s manufacturing OS are set to enable huge efficiencies in the company’s battery plant, linking directly to increased production capacity. This could, arguably, present Tesla with the prospect of displacing Toyota as the largest green OEM, both in terms of cells and also from the perspective of pushing greater electric car affordability.
I’m also bullish about Grohmann, Tesla’s automation group, showcasing its new manufacturing technology. Tesla’s upcoming giga-factory in Austin will be the first to have this technology, allowing enough time for any errors to be corrected.
Battery Price: It’s tantalizing to think of what will happen if Tesla’s batteries take internal combustion engines (ICE) head on, at an astonishing <$80/kWh for a battery pack. What I think of as the dark horse of battery tech – lithium iron phosphate (LFP) technology with no nickel or cobalt – could make the cut, especially with trends now swinging towards LFP.
In terms of models, I think we could see Tesla evaluating various business models ranging from supply, licensing and contract manufacturing to IP and second life of batteries. We could also see Tesla leveraging the new battery architecture and chemistry on which it is working to kick start the second life of car batteries in energy storage applications and launch a new disruptive energy product / business model.
#Blow-your-mind: Tesla’s <$80/kWh could cause an even earlier than anticipated demise of ICEs.
New S and X models will, in all likelihood, house the new battery technology. This might mean that the existing cell pack technology will be considered for a new battery outsourcing model, competing with other outsourcing models like GM Ultium.
And, while a bit far reaching, we could very likely see Tesla following on the lines of Apple’s service driven derivatives to launch an energy driven product.
Tesla’s innovations in battery technology, manufacturing and price, backed by Musk’s usual bravura performance will, I believe, make Battery Day surpass the hype. We’re all waiting to have our minds blown. From Musk and Tesla, we’ve come to expect nothing less.