Tesla, the US-based electric vehicle and clean energy company, plans to reduce the cost of its battery cells drastically, which could contribute to the new target of the company – an electric car for $25,000.
CEO Elon Musk said that its new “tabless” battery cells would allow Tesla to ‘half’ the prices per kilowatt-hour by changing the materials inside the cell and making electrical cars approximately the same price as fuel run cars.
The price per kilowatt hour (kWh) is the most widely used energy unit for calculating battery capacity in modern electric vehicles. These prices dropped marginally in the last decade, from $1,100 per kWh in 2010 to $156 per kWh in 2019, which is a drop of 87%.
Experts expect the price to reach $100/kWh by 2023, but Musk said Tesla will initiate a three-year project, that would push the price further down — though he didn’t specify the price target.
A battery is more than its cells. A lithium-ion battery cell costs $100/kWh to be made. This means that a battery pack with additional components like battery management and cooling systems will cost $125 – $130 or more.
Depending on their power, the battery packs today cost about $10,000–$12,000. Thus, the answer to delivering higher affordable electric cars could be low battery costs. The goal of Tesla is to potentially reduce the cost of battery packs to less than $6,000, thereby putting cell costs well under $100 per kWh.
Over time the average price of electric cars has dropped from $64,300 in 2018 to $55,600 in 2019. And this is mostly attributed to Model 3 of Tesla. However, the price of a typical gas-fired gas-fired vehicle is still at $36,600, even though that price has been on a continuous rise.
Tesla’s first car for the wider market was supposed to be Model 3. From a very early point, the company’s “master plan,” as laid down by Musk in a 2006 blog, was to build a desirable electric sports car that will be designed to persuade people that electric vehicles can be cool (which at the time wasn’t an easy task). The company planned to use the revenue from the sale of this model to help finance a more affordable luxury sedan and further extract the money from its sales to build a car that can be purchased by the masses.
This is not the first time that Musk has predicted a dramatic cost reduction for its electric vehicles. He promised an Electric Vehicle of $25,000 for the very first time back in 2018.