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Tesla: Lithium-ion Battery News , Cheaper Car Battery Plan Means Profit


Tesla Motors Inc., the electric carmaker backed by Toyota Motor Corp., said cheaper batteries will make its Model S sedan profitable with much lower sales than Nissan Motor Co. is seeking for its Leaf car.

The $ 57,000 electric Model S, which uses cells similar to those in laptops, is designed to make money for Palo Alto, California-based Tesla at 20,000 annual deliveries, Chief Technology Officer J.B. Straubel said in an interview. Nissan chief executive officer Carlos Ghosn has said combined battery-car sales for Nissan and affiliate Renault SA may need to reach 500,000 vehicles a year to be profitable without government aid.

Nissans choice of a larger type of lithium-ion battery means they will have a cost challenge that will be more difficult to solve, Straubel said Dec. 29 in an interview.
A tesla Model S electric car is seen at the Tesla Motors Inc. auto plant in Fremont, California. (Bloomberg)

It will require a lot higher volume before they really get to a cost point that is internally sustainable.

Teslas battery packs may cost as little as $ 200 per kilowatt hour, compared with about $ 700 to $ 800 per kilowatt hour for so-called large-form cell lithium-ion packs, Martin Eberhard, a Tesla founder and former chief executive, said in an interview last month. Straubel declined to confirm Eberhards estimate or discuss the cost of Teslas battery packs.

Nissans electric vehicle strategy cant really be compared with that of Tesla, said David Reuter, a spokesman for the Yokohama, Japan-based companys North American unit. He didnt elaborate.

The Nissan Leaf product program will be profitable over its lifecycle, Reuter said. He declined to say how long the product cycle would be for the $ 32,780 Leaf. The company has been developing its lithium-ion battery technology over the past two decades, so a lot of the investment has already been amortized through many years, Reuter said.

Teslas Straubel conceded the Model Ss higher price will make it easier to turn a profit with fewer deliveries after it goes on sale in 2012. Still, cheaper batteries are the main reason, he said.

Teslas challenge is to ensure a high level of quality control in its battery pack and assembly processes as it tries to expand from supplying about 1,000 Roadsters a year to making 20,000 or more of the Model S, said Brett Smith, who specializes in alternative propulsion vehicles at the Center for Automotive Research in Ann Arbor, Michigan.

Theres a method to their madness, Smith said. Tesla is using cells that, while not exactly the same as those in laptops, can be made on existing lines that already mass-produce them.

As a result, Tesla didnt have to spend as much for battery research and development and lithium-ion cell production, Smith said. Especially for a small manufacturer, theres a logic to what theyre doing, Smith said.

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