Tesla (NASDAQ: TSLA) Cutting Lithium Battery Costs in Half

Keith Kohl

Written By Keith Kohl

Posted September 24, 2015

The famous Tesla Gigafactory is set to begin production by the beginning of 2016.

As you know, there are already thousands of pre-orders for Tesla’s latest Model X car and its upcoming home and business Powerwall and Powerpack batteries.

The innovations Tesla has made in the lithium-ion battery industry are now expected to dramatically lower the price from their currently estimated $250 per kilowatt hour to just $38/kWh.

That more than 50% savings won’t just boost Tesla’s image, but will bring more affordable lithium energy storage availability to the whole world.

Jeffries analyst Dan Dolev has estimated this change based on Tesla’s recent and possible future performance. This includes an increased price target of $365 for Tesla shares.

Dolev also included the global economies of sale, increased automation, and production domestication as major factors in Tesla’s possible success.

This means the company’s current positive public image, use of U.S. lithium mining companies, and the very machinery that will run in the Gigafactory will work together to brinGigafactory Constructiong the cost of Tesla’s battery packs way down.

The make-up of the batteries themselves will be a factor as well. Previously, Tesla planned to experiment with higher levels of silicon in the battery anode, and it seems this technique will be used in future battery packs.

In the past, it was estimated that Tesla’s innovations would reduce battery pack costs by about 30%. With this new appraisal, that may be a conservative estimate.

What’s more, even Dolev’s estimation may be too high. The current $250/kWh price on Model S batteries is only an estimate itself. Currently, that’s about the price of Tesla’s wall-bound Powerpack systems.

The actual price of the Model S battery could be as low as $200/kWh, which would make the end price, $38/kWh, an over-estimation.

We’ll just have to see how the market reacts when the Gigafactory begins production. But any drop in the price of the battery packs, 30%, 50%, or 70%, will help both Tesla and the global lithium battery industry.

To continue reading…

Click here to read the CleanTechnica article.

Until next time,

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Keith Kohl

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A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.

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