Interview Transcript

Where are we today on unit cost of the cell and the pack?

Major manufacturers for Western markets are offering ten years of warranty. It’s about $120 a kilowatt/hour at the cell level and between $160 and $170 dollars a kilowatt/hour at the pack level.

That’s a total, you mean. So, $40-50 per kilowatt/hour for the pack? For the battery, for the systems around that, plus the cell cost, which is $120?

Right, the total. So, 75% of the pack cost is made up of cells and the rest is battery management system, thermal management system, and the manufacturing cost.

Where do you think Tesla and Panasonic are versus that industry-wide number?

It’s always been hard to pin down Tesla, and what also makes the comparison a little bit hard is the level of integration they do; the BMS (Battery Management System), for example. When we build packs, all the battery management system is in the pack, whereas I think Tesla take some of that content out and integrates it with some of the other ECUs. So, given that, my sense is that Tesla is about the same, maybe a little bit lower on the cell cost, and correspondingly, a little bit lower on the pack. Not much more than maybe 5%. The numbers I quote are prices, so they do include a little bit of margin, both at the cell and the pack level. Whereas I think, when Tesla quotes their numbers, they’re always cost, which will make it 8-10% lower.

So, let’s say they’re 10% lower today. As the industry scales and, like you said, the capacity in the industry is going to be, let’s say, ten times bigger in ten years; it’s pretty hard for Tesla to have an advantage at scale versus NCM.

Today, NCA has a little bit of a scale advantage. Out of the 70-gigawatt hours of capacity that was used last year for passenger vehicles, a significant chunk was NCA, maybe 30-40%, whereas the rest was split between NMC and LFP. But if you fast-forward to 2022-2023, a significant chunk of the market will be in NMC for passenger vehicles, which is going from 70 gigawatt hours to 700 by 2025. That’s actually tipped the scales in favour of NMC compared to NCA because there is still quite a bit associated with processing costs. If you look at just the cost of the metals, that makes up about maybe 30-40% of the cost of the cathode material which, in turn, makes up around 35% of the cost of the cell. With that kind of a gap, as you get economies of scale, NMC is going to have the advantage over NCA because Tesla and Panasonic are the only players who will continue with NCA, and at some point, Tesla may consider switching over.

Sign up to test our content quality with a free sample of 50+ interviews