Tesla says battery costs will drop by 35%, hinting at $125/kWh

According to foreign media reports, recent studies have shown that the cost of electric vehicle batteries will drop to $227/kWh in the next six years. This is an extremely exciting technological advancement for the entire electric vehicle industry, but for long-distance electric vehicles, the cost is still somewhat unaffordable.

Only by reducing the price of battery cells and battery packs below the current market average can electric vehicles attract mass market users to buy vehicles at a reasonable price point. Currently, Tesla's Gigafactory is trying to achieve the above goal. The company aims to reduce the cost of batteries before leaving the Gigafactory by at least 30%, but in Tesla's latest promotional video, it proposes to set the cost reduction as "35% reduction".

As of early 2016, Tesla had never officially disclosed its plan to reduce battery costs to "below $190/kWh" because battery production had not yet moved to the Gigafactory.

Since announcing the production of batteries in the Gigafactory, Tesla has made it clear that it will reduce the cost of battery packs by "30%." Not only that, Tesla CEO Elon Musk has repeatedly hinted that the reduction in battery costs may be even greater in the years ahead.

Indeed, some of Tesla's stores seem to be playing promotional videos that mention Tesla's plan to reduce the cost of its batteries by 35%, which seems to be a strong confirmation of Musk's previous hint.

What’s even more interesting is that now that Tesla is working with Panasonic to produce its new “2170” battery cells in the Gigafactory, news of reducing battery costs has come out. Tesla’s chief technology officer, JB Straubel, said last year that he did not expect battery costs to become a major limiting factor in the price of Tesla’s Model 3 ($35,000), so it’s not hard to imagine why Tesla is claiming that it will significantly reduce battery costs.

Although Tesla has not yet directly disclosed the specific battery costs, its battery cost structure is beginning to become clear, and we can infer it from the few words Tesla has previously revealed.

From "less than $190/kWh" at the beginning, the cost has dropped by 35% to "less than $124/kWh". If we assume a 55 kWh battery pack, the battery cost for the base Model 3 will be "less than $6,875". Although the battery may still be the most expensive component in the Model 3 sedan, the pricing of the Model 3 will fall back to $35,000 per car, as this price is more reasonable.

If the cost of electric vehicle batteries can drop significantly to $100/kW, it will mean that electric vehicles will still be cost competitive even compared to gas vehicles. In the past, Musk has said that he would be extremely disappointed if Tesla could not reach this goal by 2020. But he must first ensure that the battery production of Tesla's super factory will be greatly increased in the next two years, otherwise it will not be able to meet the battery demand of the new Model 3 production plan.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.