Batteries are a crucial link on the path to a net zero emissions global economy. In order to mass-produce affordable electric vehicles, and to store low cost solar/wind electrical energy for the grid, batteries need to become a lot cheaper and production needs to increase exponentially. On Tesla’s much anticipated "Battery Day” presentation on 9/22, Elon Musk laid out the battery challenge we face: In order to transition the global vehicle fleet to electric power, we will need to manufacture ten terawatts of battery capacity per year, every year, for 15 years to replace all gas/diesel vehicles with all-electric vehicles (1 terawatt is 1,000 gigawatts — a large coal facility can generate 1 gigawatt of electricity). In addition, to have enough battery capacity for a net zero electric grid (to store wind/solar generated electricity for times of no wind or sun), we need to manufacture another 20 to 25 terawatts of storage.
Musk noted that the new Tesla Nevada Gigafactory is only able to make 150 gigawatts of battery capacity per year at scale (0.15 terawatts) — a token amount. In an attempt to meet these daunting goals, Tesla engineers have been working together on multiple major innovations in battery design, materials and manufacturing. As Musk noted, all three elements must be harmonized to achieve the targeted production, performance and cost goals.
Imagine if Ford announced a new internal combustion engine that was 50% more efficient, cost 50% less and weighed 50% less than its best performing engine today. It would be a devastating blow to its competitors. That is what Tesla effectively announced: a series of profound battery design, materials and manufacturing innovations to cut the cost of batteries by more than half, in three years, and to make them 50% more efficient per pound. The battery pack is key: the current Tesla Model 3 is a $38,000 car with a $12,000 battery installation, or 32% of the car total build cost. The innovations include a new tabless design, larger cells, dry coating the anode film, a continuous production line and elimination of the expensive commodity cobalt in favor of nickel. The batteries will also be fully recyclable. Musk further claimed, there is sufficient supply of lithium in Nevada that can be mined and processed in an environmentally friendly way.
Tesla is operating its own pilot battery factory in Fremont, CA, which is already on its third/fourth iteration of manufacturing machinery design, to test and refine these innovations. These innovations should allow a 7x production increase from a plant the size of Giga Nevada or approximately 1 terawatt of production capacity per year. Musk projected that the first next generation plant could come on-line in around 3 years. Tesla hopes to have the capacity to manufacture 3 terawatts of batteries per year by 2030 (or about 30% of the 10 terawatts needed for vehicles). Tesla will eventually make all or most of its own batteries. Production at these levels solves for about 30% of the total global battery need for vehicles and Tesla was transparent about its innovations, hoping to stimulate and inspire other players.
These batteries will provide an over 50% increase in range, improving the Model 3’s maximum distance on a single charge from 300 to 450 miles. Importantly, Tesla will now be able to achieve Musk’s ambition of building an affordable $25,000 electric vehicle, which will be a new, smaller car, benefitting from battery pack cost cuts and additional significant innovations in vehicle manufacturing which were also announced on 9/22. These cars, like all Tesla cars, will also benefit from full self-driving capability, fuel and maintenance savings, higher resale value, greater longevity, lower insurance costs and superior passenger safety. Tesla is aiming to eventually manufacture 20 million vehicles per year or about 25% of current total global production. As Musk said: "When Henry Ford made cheap, reliable cars, people said, 'Nah, what's wrong with a horse?' That was a huge bet he made, and it worked.” Tesla also announced it is taking orders for its new 1100 horsepower Model S Plaid for delivery in late 2021, which will have 520 miles of range, a top speed of 200 mph and go from 0 to 60 in less than 2 seconds.
