Light in the Tesla tunnel: how batteries might make all the difference
The US electric-car maker’s lead in battery technology gives it a cost advantage that may last for several years and help it face down new competition, research shows
London — Tesla’s lead in battery technology gives it a cost advantage that may last for several years and help the US electric-car maker face down an onslaught of new competition, according to new research from Bloomberg New Energy Finance.
Batteries made by the US manufacturer and its Japanese partner, Panasonic, require less cobalt, the metal whose price has shot up with demand for electric cars.
CEO Elon Musk said on June 5 that Tesla is targeting a cell-level price of $100/kWh in 2018 and battery-pack costs below that level within two years. Bloomberg New Energy Finance does not expect average pack prices to drop below $100 until 2025.
"If Tesla reaches its pack-price milestone, it will be several years ahead of our industry benchmark," Bloomberg New Energy Finance said in the report. The researchers noted that others made batteries for as low as $120/kWh in 2017, "which suggests that Tesla is not alone in being ahead of the curve".
Tesla has not been able to extend its US dominance in electric cars to other regions, and is now under threat from new models coming from European brands like Volkswagen, Daimler, Volvo Cars and BMW.
The competition will be toughest in the SUV and crossover segment, where the Model X goes up against new models from Jaguar Land Rover’s I-Pace, Audi’s coming E-Tron and the Hyundai Kona, due in 2019.
Daimler’s Mercedes-Benz unveils its EQC crossover on Tuesday in Stockholm, part of a plan to invest at least €10bn to develop a range of electric vehicles.
With expanded consumer choice, competition will focus not just on the availability of electric cars, "but by more prosaic issues such as price, build quality, after-market services and user experience", the report said. "If Tesla is to maintain its early leadership in the EV industry, it may have some ground to catch up in these areas against the established carmakers."
By contrast, Tesla and China’s BYD are the only two vertically integrated electric-car makers, "which may confer a long-term advantage if battery technology becomes a major differentiator", the report said.
BYD is the leader in global electric-car sales, with 9.9% of the market, says Bloomberg New Energy Finance. Tesla is just behind at 9.7%.
In other areas, the results are mixed. Tesla is improving production of the Model 3 and its products will still stand out through 2020, Bloomberg New Energy Finance said. The company will need significant investments in China and to develop its semi-truck, Model Y and pickup truck, the report said.
Meanwhile, delays to an upgrade of its Autopilot feature and a lack of mobility services leave it behind other carmakers, the report said. The Solar City business it acquired for $2.1bn has not lived up to expectations.