Tesla’s recent truck announcement set off a round of speculation regarding its price. Steve Levine, an Axios journalist who wrote a whole book about battery technologies, wrote a few days ago that “experts estimate that the Semi could be $300,000.” MIT Technology Review speculated that the Semi would cost even more: $400,000.
So a lot of people were surprised on Thursday when Tesla posted estimated prices for its Semi product. According to the company, a low-end truck with a 300 mile range will cost around $150,000, while you’ll be able to get a range of 500 miles for $180,000. A premium “Founders Series” truck will cost $200,000.
That’s more than the $120,000 cost of a typical conventional truck. But Tesla says that its truck will deliver $200,000 in fuel and maintenance cost savings over the life of the vehicle. If that’s true, paying an extra $30,000 to $60,000 for the truck would be a bargain.
Tesla is labeling these as “expected” prices, and the truck isn’t due to launch until 2019. Elon Musk has a track record of setting overly ambitious goals and blowing through deadlines. So we shouldn’t be surprised if the first deliveries slip into 2020 and a truck with 500 miles of range costs a bit more than $180,000.
Still, Tesla probably wouldn’t be teasing prices this low unless it had some reason to think it could deliver some dramatic price reductions.
The key issue here is battery costs. Batteries are expensive, and it takes a lot of power to move a fully-loaded semi. Tesla says that its trucks consume “less than 2 kWh per mile,” so a 500-mile semi could require as much as 1,000 kWh of battery capacity. A Tesla executive stated last year that its battery pack costs were below $190 per kWh. At that price, 1,000 kWh of batteries would cost $190,000, putting the total cost of a truck in the neighborhood of $300,000.
But Tesla might be giving itself wiggle room with that 2 kWh per mile figure, and battery costs have continued to fall since last year. In April, another expert told Levine that a 500-mile truck might only need 500 kWh of battery capacity, and that batteries could cost as little as $120 per kWh, making the total cost of the battery around $70,000.
That’s right in line with Tesla’s expected costs for the Semi battery. The $30,000 cost difference between the 300 and 500-mile versions of the Tesla truck suggests that Tesla believes it can get a 200-mile range for $30,000, which translates to $75,000 for a 500-mile battery.
One complication here is Tesla’s promise that the truck will be able to operate for a million miles without breaking down. Levine says an insider told him that this guarantee includes the battery. That’s surprising because a typical lithium-ion battery is good for 1,000 charge cycles—which would mean the 500-mile truck would need a new battery after 500,000 miles.
In an interview with Levine, Stanford researcher Tony Seba pointed out one way to get a longer range: “If you don’t fully charge and discharge a battery, it’s going to last far longer.” So perhaps Tesla is putting extra battery capacity on the truck, allowing it to charge and discharge slowly and never be fully drained. But of course, adding more battery makes the truck more expensive.
Fortunately, Tesla has good reason to expect battery prices to continue falling over the next two to three years.
High-tech products almost always fall in cost as they are manufactured at higher volumes. And that’s been happening surprisingly quickly with batteries. A McKinsey study last year found battery costs had fallen so that a capacity that cost $1,000 in 2010 was at $230 six years later. If costs continue to fall at that rate over the next three years, we can expect costs to be well under $100 per kWh by 2020, putting Tesla’s ambitious truck price targets comfortably within reach.
Whenever someone talks about battery characteristics and just uses the term, “lithium ion battery” instead of the particular chemistry, you know they are morons or think their audience consists of morons.
The life cycle characteristics of LiCO, NCA, NMC, LMO, and lithium titanate, all chemistries that have been used in some volume in cells for transportation, have significant difference in cycle life characteristics.
Tesla’s passenger vehicles thus far have used NCA with the Model S in 2012 and onwards. That’s a chemistry that has very high gravimetric energy density and made the Model S possible with its range and driving characteristics. The typical cycle life shown at 100% charge and discharge cycles is an abysmal 300-500 cycles and closer to 300 with a degradation to 80% capacity. But… if you change the charge/discharge cycle window to 60% of the battery, then you can get 3,000 cycles with a degradation of merely 12-13%. So a Model S or X, which usually doesn’t drive 200+ miles every day, but rather averages closer to 300 miles a week can use this chemistry and expect to achieve 300,000+ miles of service life, with most probably reaching somewhere around 500,000 miles.
For stationary storage, Tesla has been using NMC chemistry for daily cycling. It can have 4,000+ cycles daily at more like 90% depth of discharge to 80% degradation, but again, even amongst NMC, there are widely different variants with different life cycle characteristics. Lithium titanate can hit 10,000+ cycles, but the costs have been very high and the specific energy very low so it hasn’t found much of a foothold in vehicles. That may change as Toshiba is working on newer variants.
Also, the battery management system, including the thermal management plays a big role in life cycle. Expose batteries to cold or hot and stress them, and you kill the batteries much faster. That’s why Tesla vehicles have been using extensive thermal management and has shown great life cycle characteristics. The Nissan Leaf and VW e-Golf do not, and their history in life cycle has been poor.
So this 1,000 charge cycles talk is complete crap. Tesla has already stated that the Tesla Semi uses chemistry closer to their stationary storage products… likely a new version of NMC, maybe NMC 811 with more silicon in the anode than they’ve been using so far. 4,000-6,000 cycles is closer to what this chemistry can do with the right thermal management and depth of discharge windows, which still achieving close to or maybe better specific energy (gravimetric energy density) than the NCA chemistry they are currently using in passenger vehicles.