[Battery Day] "Electric Cars Cheaper Than Internal Combustion Vehicles"... Musk's Ambition to Expand Battery Capacity (Comprehensive)

"Electric Car Priced Around 29 Million Won to Launch Within 3 Years"... Key Issue is Battery
Enhancing Performance and Lowering Price to Drive Electric Car Popularization
Reducing Cobalt Proportion in Battery Core Materials and Expanding Nickel Use
"No Specific New Technology"... Market Disappointment Leads to Stock Price Decline

▲Elon Musk, CEO of Tesla [Image source=AP News]

[Asia Economy Reporter Kwon Jae-hee] The American electric vehicle company Tesla has unveiled an ambitious plan to launch an electric car priced at $25,000 (approximately 29 million KRW) within three years. The goal is to accelerate the popularization of electric vehicles by lowering the cost of batteries, a key component, and drastically improving production processes. However, when the details were revealed, it turned out to be nothing more than a long-term plan without significant achievements, causing the stock price to plummet. The greater the expectations, the greater the disappointment among investors.

According to the Wall Street Journal (WSJ) and others on the 22nd (local time), Tesla CEO Elon Musk announced this at the 'Battery Day' event held at the Fremont factory in California, emphasizing, "We will realize electric vehicles cheaper than internal combustion engine cars."

Musk presented the popularization of the electric vehicle era. To make this possible, the price of electric vehicles must become cheaper than it is now, and the key to lowering production costs is to reduce battery prices. Currently, batteries account for about 40% of the cost of electric vehicles.

The key is reducing battery costs... Challenging the development of 100% nickel batteries

To this end, Tesla plans to develop batteries using 100% nickel cathodes. CEO Musk announced, "We will develop batteries using 100% nickel cathodes to reduce electric vehicle costs and increase driving range." Nickel is inexpensive and has a high energy density, making it suitable as a battery material.

However, safety is considered a limitation. This is why current battery manufacturers use cobalt as a raw material despite its high price. Drew Baglino, Tesla’s Senior Vice President of Powertrain Energy Engineering, said, "The challenge going forward will be to create batteries that use only nickel, reducing costs while maintaining high safety."

CEO Musk stated, "Securing a nickel supply chain is important to increase battery production," adding, "We have been in contact and negotiating with major mining companies for this purpose."

Capturing both battery performance and price

Tesla also announced plans to develop a new cylindrical battery called the '4680'. The intention is to enhance battery performance while reducing costs, ultimately lowering the price of electric vehicles. CEO Musk said, "Truly affordable electric vehicles have not yet appeared," adding, "Lowering battery prices is key to popularizing electric vehicles." WSJ explained that, using the Model 3 as an example, the selling price would drop from an average of $50,000 to $35,000.

Regarding the 4680 battery, CEO Musk said, "It will supply five times more energy than current batteries and increase driving range, but the price will be about half." Drew Baglino, Tesla’s Senior Vice President of Energy, also said, "Equipping vehicles with the improved battery will increase driving range by 54%."

[Image source=Reuters Yonhap News]

Tesla also plans to achieve 'economies of scale' to reduce battery costs. The company aims to increase production capacity to 100 gigawatt-hours (GWh) annually by 2022 and 3 terawatt-hours (TWh) by 2030. CEO Musk stated, "We plan to expand production capacity to about 3 terawatts (3,000 gigawatts) per hour." This is 85 times the production capacity of the Nevada factory in the U.S., which produces batteries in partnership with Japan's Panasonic.

Additionally, Tesla is considering recycling battery cells to reduce production costs. This would ultimately reduce demand for cobalt, the most expensive battery material.

However, despite these rosy plans, Tesla's stock price closed down sharply by 5.6% at $424.23 on the day. In after-hours trading, it fell an additional 6.84% to $395.20. The Battery Day event was held alongside the annual shareholders' meeting, but this year’s focus on long-term vision failed to meet shareholders' expectations. Craig Irwin, an analyst at Roth Capital Partners, expressed disappointment, saying, "None of the battery aspects Musk discussed were actionable," adding, "There was nothing tangible."