- Tesla could reduce costs significantly by using cobalt-free batteries.
- Cobalt batteries are one of the most expensive components in electric vehicles.
- Elon Musk envisioned the Model 3 as a mass market car but it currently competes with luxury vehicles.
One of the biggest factors preventing the mass adoption of electric vehicles (EVs) has been their price. Even after incentives, EVs are relatively more expensive than internal combustion engines. Tesla (NASDAQ: TSLA) could be on the verge of solving this by turning to the much cheaper cobalt-free batteries.
According to Reuters, Tesla is negotiating with Chinese battery manufacturer Contemporary Amperex Technology (CATL) on the possibility of using cobalt-free batteries in cars made at Giga Shanghai. Currently, cobalt is one of the most expensive components in EV batteries.
Major cost advantages
Instead of nickel-manganese-cobalt (NMC) or nickel-cobalt-aluminum (NCA) batteries, CATL’s solution is lithium-iron-phosphate (LFP) batteries. A source told Reuters that using the latter could reduce battery costs by double-digit figures.
Last year, Tesla CEO Elon Musk revealed that the cost of replacing battery modules in a Model 3 was between $ 5, and $ 7, 06. That would suggest the battery modules by themselves are up to % the cost of a standard-range Model 3.
So how will CATL ensure the density of the LFP batteries is as good as the cobalt-based ones ? Per Reuters, the company has invented a cell-to-pack technology that boosts the density of these alternative batteries.
Model 3 still not a mass -market car
Tesla introduced the Model 3 with a view of taking electric cars to the mass market. With the lowest price of the Model 3 in the U.S. being $ , , the electric car belongs in the luxury category.
Even at the luxury car price, the Model 3 now Outsells the more expensive Model S and the Model X by a wide margin, demonstrating the market’s hunger for more affordable EVs. Last year the Model 3 accounted for slightly
This is despite the Model 3 only having been launched in 2020. The Model S was launched in while deliveries for the Model X started in
Bullish news for Tesla stock
A cheaper electric car would not only boost Tesla’s sales, but help the company justify its lofty stock value.
the delivery guide, vs our current 460 k estimate.
With the consensus estimate being , (deliveries in
Disclaimer: The opinions expressed in this article do not necessarily reflect the views of CCN.com.
This article was edited by Sam Bourgi .
GIPHY App Key not set. Please check settings