By Okoro Uche
I doubt there’s anyone who hasn’t heard of Tesla cars. Tesla has reinvented how we think of cars with their electric vehicle models. By combining innovation, technology and the desire for a cleaner environment, Tesla has created some of the most energy-efficient cars on the planet. While these cars have been environmentally friendly, their starting prices have usually not been cost-competitive when compared with petrol cars. While a Tesla may require a lower operational cost when compared to a fossil-fuel-powered car, on average most fossil fuel-powered cars of the same specs could be as much as 46 per cent cheaper, the 2019 Honda Civic, for example, retails at $20,370 and the cheapest Tesla (Model 3) retails for about $37,990.
So what’s the Plan?
But this might change soon as Tesla looks to ramp up its battery production. Batteries represent the single costliest component of electric vehicles. Battery packs currently cost around $10,000–$12,000. Producing a cheaper electric vehicle would mean decreasing this cost significantly. And that is what Tesla plans to do. In recent years, Tesla has steadily reduced battery costs per kilowatt-hour for its cars. Forbes estimates Tesla’s battery costs have declined by almost 45 per cent from about $230 per kilowatt-hour in 2016 to $127 in 2019.
On Tesla’s Annual Battery Day last week, Elon Musk, Tesla’s CEO made some bold assertion’s which are part of the company’s plans in the coming years, notably;
- Reduce battery costs by 56% on a $/kWh (dollar per kilowatt-hour) basis.
- Scale battery manufacturing to 3TWh by 2030
- Deliver a $25,000 car in three years
How feasible are Tesla’s Plans?
This is the number one question many people would be asking. Tesla’s plan to reduce battery costs would see the company now produce its batteries internally. The new battery cell will have a “tabless” design, which the company says is six times more powerful, with 16 per cent more range when compared to its old battery cell. It’s new design also contains modifications that eliminate the previous cell’s need for a conductive metal tab that transfer the stored energy from the battery pack to car’s drivetrain. This new design is hoped will drive down costs and production time.
Well, many would agree that it is likely that Tesla would meet these aspirations. Tesla’s proclamation can be said to follow Wright’s Law. Wright’s Law provides a reliable framework for forecasting cost declines in relationship with cumulative production. The law states that for every cumulative doubling of units produced, costs will fall by a constant percentage.
Globally, the price of lithium-ion battery has followed this trend as the cumulative total kilowatt-hour increased the cost per kilowatt-hour has declined, from $1,183 in 2010 to $156 in 2019 according to data from BloombergNEF. Tesla’s Model 3 costs have reduced as the number of units produced increased. From over $100,00 in Q4 2017 with the production of over 1000 units to $37,990 in Q4 2019 with the production of over 500,000. As Tesla ramps up its battery production and increases its capacity, we are likely not too far off from sub $20,000 electric vehicles.
While it may be a while before we see the streets of Lagos and Abuja littered with Teslas, on the whole, this is great news if you are a proponent of sustainable environment and a fan of our planet.