harikaried wrote: ↑Wed Sep 23, 2020 1:02 pm
If you value what Sandy Munro says…
"If I was a CEO of a big OEM, I'd be wetting my shorts right now. This is a turning point right now. 56% less cost. 54% more energy. This thing is ridiculous. Not only that -- it weighs less. Now I can see a $25,000 car worth driving. This is the end of the ICE age.
"That slide is everything that says if you're investing in ICE vehicles -- you're screwed. That is the key slide for everything. That's what happens when you have vertical integration. That slide should have been the wake-up call for everybody to say it's time.
While the projections on that slide are welcome, and I think credible on a 5-10 year time frame, they don't give us a $25,000 Model 3.
The 2019 cost estimate by Bloomberg NEF is $156/kWh, with the forecast that this will drop to about $62 by 2030. Despite the impression they tried to give in their multiple hour long Youtube ad yesterday, Tesla is not the only group working on a systematic approach to reducing battery cost and increasing energy density, but they are probably moving faster than other battery manufacturers. Tesla will have some proprietary technology to get there, like the dry film method they bought Maxwell to capture, but others will different proprietary technologies. Ultimately, the electric vehicle industry may end up with a cross licensing web similar to what happened with LED's.
Reducing the current cost per kWh by 56% turns a $45,000* car with a 60kWh battery into $39,900 car, not a $25,000 car. If you also use the 54% higher planned energy density to increase the range, then you now have a $46,300 car, although one with a 385 mile range.
Even if I start with the lowest list price offered, the proposed cost improvements leave us with $32,750 car with a 250 mile range, or a $39,100 car with ICE-equivalent range.
* My estimate from Tesla's 2019 financials and delivery numbers suggested an average Model 3 selling price of around $49,000, I lowballed my estimate slightly for this post. I suspect they are selling their $38,000 trim level for roughly break even on an incremental production basis, but a loss once including company overhead and support costs. The higher trim packages, plus the S and X are what make them profitable.
Other cost reductions besides the battery are, of course, also in work. As long as the market does not get saturated, and I don't think it will, Tesla should be able to eventually accomplish Detroit level production efficiency, and be able to offer a Model 3 base trim below $30,000, which with fuel cost savings will be roughly competitive with a $25,000 ICE sedan.
They'll work toward that incrementally, and demand will increase gradually as price comes down. There's not going to be a singular magic, "it's time" moment. The other manufacturers will jump at different times as the market grows.