Tesla (TSLA) leads battery cell cost by wide margin, according to new report

Tesla (TSLA) leads battery cell cost by wide margin, according to new report – Mar. 10th 2021 3:17 pm ET @FredericLambert Tesla appears to have a significant lead when it comes to battery cell cost compared to the rest of the auto industry, according to a new report. Battery cell and pack cost is often […]

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Tesla (TSLA) leads battery cell cost by wide margin, according to new report

– Mar. 10th 2021 3:17 pm ET

@FredericLambert

Tesla appears to have a significant lead when it comes to battery cell cost compared to the rest of the auto industry, according to a new report.

Battery cell and pack cost is often seen as the main target for optimization in order to lower the cost of electric vehicles.

Since automakers rely on suppliers to get the battery cells, some would think that battery costs are similar across the industry, but most automakers are involved to some degree in cell design and chemistry – leading to custom solutions for each automaker and different costs.

Tesla has long been believed to be the leader in battery cost thanks to its early investment in developing battery packs using common cylindrical battery cells, while the rest of the industry has been mainly using pouch and prismatic cells.

Most automakers are fairly opaque when it comes to battery cost, but Cairn Energy Research Advisors have been attempting to track battery costs as best as possible, and they released a new report putting some actual numbers on costs.

They claim that Tesla currently leads the industry by a somewhat significant margin (via CNBC):

“According to Cairn ERA, Tesla pays an average of $142 per kilowatt hour (kWh) for battery cells purchased from its three suppliers: Panasonic, LG Chem and CATL. By comparison, GM pays an average of $169 per kWh for its battery cells while the industry average runs at about $186 per kWh. Paying far less than other automakers for lithium-ion battery cells allows Tesla to also lead the industry in the cost to manufacture EV battery packs. Cairns data estimates that Tesla’s battery packs cost, on average, $187 per kWh while GM’s packs cost $207 per kWh and the auto industry spends an average of $246 per kWh for battery packs.”

As stated in the report, that’s Tesla’s current battery cell cost from suppliers like Panasonic.

Tesla has also announced plans to build its own new battery cells at its own factories.

Sam Jaffe, managing director of Cairn ERA, commented on the report:

“Tesla is definitely putting the hammer down on the accelerator pedal. They see this as the crucial period and they’re building out their capacities. Look at what they’re doing in Shanghai and in Berlin and now in Austin, Texas. They’re just piling factory upon factory.”

Based on the trend, Jaffe believes that Tesla will maintain a battery cost lead through the next 10 years, but he sees other automakers closing the gap.

He gives GM as an example.

The American automaker has invested heavily in battery cell production through a joint-venture with LG that they expect will bring the cost down below $100 per kWh.

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Fred Lambert

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