Six KPIs for Tesla's Battery Day
Tesla uses slightly different mechanics in its announcements (and in marketing in general) than classic car manufacturers. While the classic OEMs primarily only communicate new products in shows, Tesla has in the past repeatedly communicated also about individual technological components of their products, for example at the Tesla Autonomy Investor Day. The latest modular communication refers to Battery Day, which will take place on 22 September.
In general one can say that Tesla has fascinated at such events, but also disappointed. So it is really exciting to see what is possibly hidden behind the battery day.
Today we take a brief look at what this can mean and what to expect from the Battery Day.
Tesla currently has few competitive advantages in the market, so Elon Musk is attempting to position itself particularly in those areas in which classic carmakers are struggling, many of them are related to the introduction of new technology into proven processes.
Here Tesla has built up a particular advantage in the area of software, which will certainly give it a 2-3 year lead over the classic car manufacturers. Their direct-to-consumer focused sales model was a competitive advantage during the pandemics, too.
However, further competitive advantages for Tesla are strongly desired in view of the average sales figures: Tesla has hardly grown in the last year.
Since Tesla offers an enormously efficient drive train in its vehicles and the design of the cars allows large battery capacities, there is also an advantage in the range and with Teslas’ integrated approach of battery production, maybe a cost advantage. So, there are mainly a few key performance indicators that are important on battery day:
$/kwh (costs per kwh) and
wh/kg (energy density)
Share of cells in a battery pack (form factor)
C-Rate/ Charging rates of the batteries (This key figure is currently still important, but is becoming increasingly unimportant. The cheaper and more energy-tight batteries become, the less important a high charging capacity will be. Charging performance of top vehicles like the Porsche Taycan is already sufficient. It is important to establish a relationship between these KPIs. There is no point in having high energy density batteries that are so expensive that nobody buys them. On the other hand, there is no point in having cheap batteries that cannot be charged quickly.)
Durability of the batteries (battery life and maintenance costs
Sustainability of the batteries (so hard to measure that every OEM has its own KPIs here)
The change in these indicators will show whether the battery day will be a success or not. To analyze Tesla here, let us start with the battery supply.
Battery Suppliers
Global demand for batteries is growing rapidly, so battery manufacturers are not wasting any time and try to innovate. CATL and Panasonic are the main battery suppliers for Tesla, let’s look into their newest developments.
One million mile batteries will be the new durability benchmark
The biggest battery manufacturer in the world, CATL, is ready to sell a 2-million-km (1.24-million-mile), 16-years cell. Compared to the warranties of the carmakers, this is more than 8 times of that. As I wrote in advance, CATL has contracts with some car manufacturers like BMW. Maybe this will be the new standard of durability, but it must be said here that the durability was already very good even with the old battery generation from Tesla (see capacity retention of Model S/X below).
The Tesla battery cells supplier Panasonic aims to increase the energy density of their lithium-ion batteries ("2170" type with nickel-cobalt-aluminium) by 20% in about 5 years and by 5% this fall. Both views (short and long-term) are important here: on the one hand, the range of the cars can be increased by ~5% in the very short term. This is good for demand in the second half of 2020 and it’s a great achievement because Tesla-Panasonic batteries are currently analyzed as most energy-dense both on the cell and pack level.
Is 20% more energy density enough?
2170 cells are only used by Model 3 and the Model Y (not the Model S and Model X); in the future, however, the Cybertruck and the Tesla Semi could use these batteries also. Both are vehicles whose area of application requires a significantly increased range. So, it is possible that the increase in energy density by about 20% and the resulting improved range is not good enough for the Tesla Semi and (maybe) the Cybertruck.
Now it is a fact that the 2170 form factor is not the last word in wisdom. There are rumors on Twitter that Tesla has found a way to improve the form factor significantly with their Roadrunner project. The new form factor could be 5498. The advantage here would be that there is less space required, so that the number of cells can be used on the same area- without changing the cell chemistry.
What about the costs?
If we only see a 20% improvement (which is still a decent performance), it could increasingly be about reducing the cost of batteries. A pretty magic limit here is about 100 dollars per kwh. It is to be expected that Volkswagen is at about this threshold with the MEB platform and Tesla is maybe a bit above.
I could well imagine that on Tesla's battery day, we'll see an outlook aimed at the start of Production (SoP) for the Tesla Semi and we'll see here, perhaps even more aggressively than in the graph below, a further halving of the cost per kilowatt hour. It’s crystal clear: the next magic limit will be 50 dollars per kwh and for 2025 maybe 25 dollars per kwh.
One thing that this transition to a significant lower level could do would be to expand the Gigafactory to a new dimension. I can imagine that this would be used for marketing purposes, but for the hard facts it is a rather minor issue (a Terafactory would be just one of several possible enablers for reducing costs per kilowatt hour).
Competitors
Of course, other car manufacturers are also trying to differentiate themselves in the field of battery technology. This is then less relevant in the above-mentioned points (this concerns more the suppliers of battery cells/packs), but will be extended in particular by new functionalities. Even though I personally do not buy the story, Sono Motors would be an example here, who would like to build the Sion, a car that can be partially charged during a sunny day by a photovoltaic system integrated into the car.
One of these competitors is also Lucid. Lucid has shown four versions of the Lucid Air:
More important than the cars themselves, they have presented impressive features in the field of charging and battery technology with their electric sedan, Air:
DC fast charging with a peak charging rate of over 300kW
Ultra-high voltage 900V+ electrical architecture
Full bi-directionality for advanced Vehicle-to-Everything (V2X) capabilities built-in for future enablement of Vehicle-to-Grid (V2G) and Vehicle-to-Vehicle (V2V) features
The highest charging power with 300kW sounds of course unbelievable and has not been reached by any other competitor so far. But if you compare the charging speed in relation to battery size, the Lucid Air is even slightly below or on par with the current fast-charging champion Porsche Taycan. Nevertheless this figure of 300kw will play a big role in marketing (less for the users of the vehicle).
I am somewhat skeptical about the 900 volt technology because I think it adds unnecessary complexity to the vehicle. Hyundai will bring an 800V vehicle with the Hyundai 45 next year, the Taycan already has this technology. 900 volts are new, but I'm not sure that this could be rather disadvantageous in everyday life.
So let's come to the last point, the Vehicle-to-X capability. I think this is the first time Tesla is beaten in its home turf. Tesla has everything it would need in-house. However, Tesla has not yet managed to use the car as a storage system for the home or the grid. If Lucid can do that, Tesla will be beaten in their comfort zone. Here I expect a clear signal from Tesla at Battery Day not to let this sit on him.
Summary
I think we can say that the battery day will certainly be very exciting. There are currently a lot of innovations in this field (some are even a bit further away such as hybrid batteries) that I expect that we will get a view that seemed completely unthinkable a few years ago.
In particular, if Lucid manages to do Vehicle-to-X bi-directional charging, Tesla will no longer be the leading supplier for the first time - a sign that the competition is definitely there.