Will Tesla’s “Battery Day” mean “doomsday” for legacy carmakers playing catch-up?


A peek inside a segment of a Tesla Model 3 battery pack.

Tesla is expected to hold its Battery Day in April as Elon Musk announced during the company’s Q4 earnings call. The chief executive said the company has a “compelling story” to tell about things that can “blow people’s minds.”

These statements do not only pique the interest of the electric vehicle community; they also hint of updates that can spell disaster for legacy car manufacturers trying to catch up with Tesla in the electric vehicle market.

Batteries are key to staying on top of the electric vehicle segment and Tesla is the leader of the pack when it comes to batteries and energy efficiency. This has been validated by organizations such as Consumer Reports and even by competitors who go deep into their pockets and go as far as cutting their workforces to catch Tesla in terms of hardware, software, and battery technology.

Come Tesla Battery Day, the obvious would be made more obvious. Tesla could further widen the gap and set itself apart from the rest, not just as the maker of the Model 3, Model Y, Cybertruck or other vehicles in its lineup but as an energy company.

Mass Production Of Cheaper Batteries

Batteries are among the most expensive components of an electric vehicle. This is true for Tesla and other electric vehicle manufacturers. With pricey batteries, car manufacturers cannot lower prices of their vehicles and therefore cannot encourage the mass adoption of zero-emission cars.

Tesla has reportedly been running its “Roadrunner” secret project that can lead to mass production of battery cells at $100/kWh. According to rumors, Tesla already has a pilot manufacturing line in its Fremont facility that can produce higher-density batteries using technology advancements developed in-house and gained through the Maxwell acquisition.

With a $100/kWh battery, the prices of Tesla’s vehicles can be competitive even without government subsidies.”

Tesla Gigafactory 1, where Model 3 battery cells are produced. (Photo: Tesla)

Aside from the Roadrunner project, Tesla has also been setting itself up to succeed in the battery game and dominate the market with its partnerships. It has a long relationship with Panasonic that helped it manufacture batteries in Giga Nevada, but has also signed battery supply agreements with LG Chem and CATL in China.

Battery prices have been going down significantly in the last decade. According to BloombergNEF, the cost of batteries dropped by 13% last year. From $1,100/kWh in 2010, the price went down to around $156.kWh in 2019. This is predicted to come close to the target $100/kWh by 2023. If Tesla achieves the $100/kWH cost sooner than the rest, it will give the company a massive advantage over its competitors and that will eventually lead to better profit margins.

Aside from cheaper batteries, the increased battery production capacity is also key in bringing products such as the all-electric Cybertruck and Tesla Semi to life.

“The thing we’re going to be really focused on is increasing battery production capacity because that’s very fundamental because if you don’t improve battery production capacity, then you end up just shifting unit volume from one product to another and you haven’t actually produced more electric vehicles… make sure we get a very steep ramp in battery production and continue to improve the cost per kilowatt-hour of the batteries,” Musk said during the Q4 2019 earnings call.

Enhanced Tesla Batteries

Tesla already has good batteries through its years of research, experimentation, and partnerships with battery producers. It has invested a good amount of money and effort to make sure it’s leading the battery game.

This advantage is made very clear on how Tesla was able to produce the most efficient electric SUV today in the form of the soon-to-be-released Model Y crossover with an EPA rating of 315 miles per single charge versus the Porsche Taycan with a range of around 200 miles.

The Tesla Model Y crossover. (Credit: Tesla)

With the acquired technologies from companies such as Maxwell and recently a possible purchase of a lithium-ion battery cell specialist startup in Colorado, Tesla demonstrates it’s not stopping its efforts to perfect its battery technology. Maxwell manufactures battery components and ultracapacitors and it’s just a matter of time before Tesla makes use of these technologies.

When asked about Maxwell’s ultracapacitor technology during the Q4 2019 earnings call, Musk said, “It’s an important piece of the puzzle.”

Musk also referenced the Maxwell acquisition during an extensive interview at the Third Row Podcast. “It’s kind of a big deal. Maxwell has a bunch of technologies that if they are applied in the right way I think can have a very big impact,” Musk said during a Third Row Podcast interview.

There are rumors out of China claimingthat Tesla may come up with a battery that combines the best traits of Maxwell’s supercapacitors and dry electrode technologies. This could mean batteries that could charge faster, pack more energy density, and last longer.

Controlling Battery Supply

Knowing what works and what doesn’t for electric car batteries puts Tesla on top of the game. Of course, add to that what could be the best battery management system that makes Tesla vehicles among the most efficient if not the best in utilizing their batteries. With the advantage on hardware and software fronts, the thought of Tesla becoming a battery supplier is far from being a crazy idea.

Its competitors such as Audi and Jaguar have recently expressed concerns about their battery supplies as they both depend on LG Chem. Tesla– aside from its partnerships with Panasonic, LG Chem, and CATL — pushes the limit to develop its new battery cells in-house and that opens up a lot of possibilities for Tesla as a business.

“It would be consistent with the mission of Tesla to help other car companies with electric vehicles on the battery and powertrain front, possibly on other fronts. So it’s something we’re open to. We’re definitely open to supplying batteries and powertrains and perhaps other things to other car companies,” Musk was quoted as saying.

Recent job postings for a cell development engineer and equipment development engineers suggest that Tesla might actually be considering the idea of introducing a battery line of its own. But of course, the next-generation batteries would be first used for its vehicle lineup. Once it meets that demand and hits economies of scale, one can only imagine how Tesla could play the important role of supplying batteries to other carmakers.

Whether Tesla would announce cheaper batteries, enhanced electric car batteries, or give updates about its efforts, Battery Day in April will most definitely be worth the wait. For other car manufacturers, time would pause during that day as they listen to what Elon Musk and his team will say. And most likely, after the company talk, other car manufacturers will have to go back to their drawing boards once more in an attempt to catch up.

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