Last night Tesla's eccentric CEO Elon Musk held a private outdoor event, dubbed 'Battery Day' to update shareholders (and the world) on advancements in Tesla's battery technology. The event was viewed live by 270,000 people around the world and in true Elon fashion, the 240 shareholders in attendance viewed the event each sat in their own Model 3 in the audience.
What was the importance of the event? What did Elon announce and how will this affect Tesla and the EV market as a whole moving forward? We've covered the main talking points from Battery Day below.
The main take away from last night's event was the announcement of new cylindrical Tesla made batteries. Musk claims that these new batteries can produce five times more energy, six times more power and 16% more driving range. The new cylindrical, or "tabless", batteries would be integrated into the design of the car and would reduce the weight of the vehicle. The size and weight of batteries is something that limits the capability of electric vehicles, in simple terms, if you could fit more batteries in a car you can extend the car's range. Tesla's new smaller and more powerful batteries would go some way to tackling the issue of range in electric vehicles.
The battery announcement was also significant as it finally confirmed something that Musk has been hinting at for a while. Tesla, who currently uses Panasonic batteries, are going to start producing their own. This is a bold and ambitious move and not without risk, but with high risk comes high reward and the move to make its own batteries could have significant positive effects. Firstly, it would improve manufacturing efficiency and allow Tesla to continue to scale up. There were problems with Panasonic's production of batteries which slowed the production of both the Model 3 and Model Y. These could be avoided if Tesla can get their production process right and allow their market share to continue to grow quarter on quarter.
Even more importantly, it would bring down the cost of producing batteries which ultimately would bring down the cost of Tesla's cars. Batteries account for about 25-40% of the entire cost of an electric vehicle, if manufacturers are serious about reducing the price of EVs to make them more accessible, then reducing the cost of batteries is paramount. Experts use price pew kWh as a key metric in measuring the production costs of EVs compared to combustion engine vehicles. Research suggests that the critical point where EVs will cost the same to manufacturer as combustion engine vehicles is when batteries are cheaper than $100 per kWh to produce. in 2019 Tesla's batteries cost around $150-200 to produce, putting the average cost of one of their batteries at $14,000. Musk claims that they finally have a plan to reduce production costs below $100per kWh which revolves around these new cylindrical batteries.
Musk claimed that the new battery technology was about 3 years away. However, he has a history of over promising and missing ambitious targets, for example In 2018 he pledged the the $100 per kWh production was achievable within 3 years, but here we are on the eve of 2021 and the target has been delayed by another 3 years.
Musk acknowledged the fact that they do not offer an affordable car, he went on to say that offering a cheaper model is key for them to continue to scale up. He stated that they plan to offer a $25,000 (£19,600) model within three years. This would be a knock on effect of cheaper battery battery production (as discussed above). In theory, this would be great. Tesla's price point does take a significant amount of consumers out of the equation and it's not a secret that cheaper electric cars hold the key to mass adoption. Whether or not they will achieve it is a different story. This isn't the first time that Elon has predicted Tesla would offer a reduced price EV, he first promised a $25,000 model back in 2018, and said it was achievable inside 3 years.
For the car enthusiasts out there, this was probably the most exciting piece of news. Musk has been hinting at the Plaid power train for a while now and he finally announced plans to apply it to the Model S. The new power train would see the Model S achieve speeds of up to 200mph with a 0-60 time of under 2 seconds. It would be able to achieve these brake neck speeds with a range of 520 miles. When you combine the performance and range capabilities, this could make the Plaid Model S the most exciting electric vehicle to be released, ever. Charging infrastructure needs to improve to accommodate it but EVs with range in excess of 500 miles would be a major breakthrough in convincing petrol and diesel heads to switch to electric. The revamped Model S is supposed to be available in late 2021 so keep your eyes peeled for this one.