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I thought about this some more, and I realised, Tesla and other EV manufacturers better be praying that this is not a financially viable replacement for gas tu

I thought about this some more, and I realised, Tesla and other EV manufacturers better be praying that this is not a financially viable replacement for gas turbine peakers in general. Otherwise there will be a big jump in demand for batteries, as power companies will be looking for hundreds of GWh of battery capacity. If they make a yearly profit for the power company that's significant enough to warrant the CAPEX of replacement, increasing the battery price by 10% only means one or two more years before break-even. So power companies could easily afford that if we assume the investment at current price levels is profitable for them. That is going to significantly (negatively) affect the price developments of batteries and constrain supply even more than today, so EV manufacturers will be faced with either losing (more) money on each car or increasing prices and selling less cars. Unless we assume Tesla is looking to pivot out of EVs in general, but I think that's a rather absurd assumption given their current actions.

ghshephard 10y ago
I recall reading quite a while ago that Tesla said that they see themselves primarily as an energy company. Looking for a citation...
manicdee 10y ago
The batteries used for cars are different to the batteries used for power banks. Tesla is selling internally to themselves, and already has production set up for batteries for stationary power. The best outcome is for demand to ramp up, keeping prices high long enough to fund the rest of the construction of the gigafactory. No praying required.
- semi-extrinsic 10y ago
  Musk has stated publically that they're betting the company on the battery price coming down for the Model 3 to be profitable. That's why they're building the Gigafactory, to reach $100/kWh. If suddenly power companies start buying lots of batteries, and prices stabilise at or above today's levels, it would mean (by implication) that the Model 3 won't be profitable (at least initially). Sure car batteries and power banks are different, but they're all Li-ion and I believe Tesla (unlike others) is packing 18650's in both.
  - Hondor 10y ago
    If prices don't come down, especially due to higher demand, and the car isn't profitable then the battery factory will be instead. Sounds like they win either way.
    - Phlarp 10y ago
      If this really ends up being the case they can just slow the model 3 deliveries to a trickle-- All those pre-orders are really just an interest free loan with fungible time tables on actual delivery, and the "financing terms" only get better for Tesla the longer they kick the can down the road. (What is the net present value of $1000 in 2020? 2025?)
  - jsight 10y ago
    18650 is a packaging size. The internals can vary.
azernik 10y ago
Tesla seems to be making the opposite gamble - that the grid-attached storage market will give the large-battery market economies of scale and help the EV market (and the other way around). They're building a very-large-scale battery factory, and probably cannot utilize it fully just on building their own cars.
- mikeash 10y ago
  Even if massive demand for batteries driven by grid storage makes EVs uneconomical, Tesla is setting themselves up to build and sell the batteries, so they win either way. (Well, aside from their goal of having the entire planet transition to EVs. They win financially.)
mtgx 10y ago
That would only be a problem in the short term - if that. In the long term, if the demand is as high as you say (hundreds of GWh per year), then you'll see Tesla, Panasonic, Samsung, LG, Bosch, and whoever else is making batteries step all over themselves to build new mines or mining capacity and more battery pack factories like the Gigafactory. This would be a great thing for EVs. At worst it will be a few years of slowed down growth for EVs just like we're seeing now with cheap oil. These are all temporary, and neither will "kill EVs". And after the dust has settled, you'll probably see $50-$70/KWh batteries in cars.
nl 10y ago
Extra demand for that giga-battery factory Tesla is building? What a dreadful problem that is(?!) Also, there are other vendors happy to sell more batteries, including alternative technologies which are unsuited to cars but very suited to static power battery stations. (eg, Flow Batteries)

ghshephard 10y ago

I recall reading quite a while ago that Tesla said that they see themselves primarily as an energy company. Looking for a citation...

manicdee 10y ago

The batteries used for cars are different to the batteries used for power banks. Tesla is selling internally to themselves, and already has production set up for batteries for stationary power. The best outcome is for demand to ramp up, keeping prices high long enough to fund the rest of the construction of the gigafactory. No praying required.

semi-extrinsic 10y ago
Musk has stated publically that they're betting the company on the battery price coming down for the Model 3 to be profitable. That's why they're building the Gigafactory, to reach $100/kWh. If suddenly power companies start buying lots of batteries, and prices stabilise at or above today's levels, it would mean (by implication) that the Model 3 won't be profitable (at least initially). Sure car batteries and power banks are different, but they're all Li-ion and I believe Tesla (unlike others) is packing 18650's in both.
- Hondor 10y ago
  If prices don't come down, especially due to higher demand, and the car isn't profitable then the battery factory will be instead. Sounds like they win either way.
  - Phlarp 10y ago
    If this really ends up being the case they can just slow the model 3 deliveries to a trickle-- All those pre-orders are really just an interest free loan with fungible time tables on actual delivery, and the "financing terms" only get better for Tesla the longer they kick the can down the road. (What is the net present value of $1000 in 2020? 2025?)
- jsight 10y ago
  18650 is a packaging size. The internals can vary.

azernik 10y ago

Tesla seems to be making the opposite gamble - that the grid-attached storage market will give the large-battery market economies of scale and help the EV market (and the other way around). They're building a very-large-scale battery factory, and probably cannot utilize it fully just on building their own cars.

mikeash 10y ago
Even if massive demand for batteries driven by grid storage makes EVs uneconomical, Tesla is setting themselves up to build and sell the batteries, so they win either way. (Well, aside from their goal of having the entire planet transition to EVs. They win financially.)

mtgx 10y ago

That would only be a problem in the short term - if that. In the long term, if the demand is as high as you say (hundreds of GWh per year), then you'll see Tesla, Panasonic, Samsung, LG, Bosch, and whoever else is making batteries step all over themselves to build new mines or mining capacity and more battery pack factories like the Gigafactory. This would be a great thing for EVs. At worst it will be a few years of slowed down growth for EVs just like we're seeing now with cheap oil. These are all temporary, and neither will "kill EVs". And after the dust has settled, you'll probably see $50-$70/KWh batteries in cars.

nl 10y ago

Extra demand for that giga-battery factory Tesla is building? What a dreadful problem that is(?!) Also, there are other vendors happy to sell more batteries, including alternative technologies which are unsuited to cars but very suited to static power battery stations. (eg, Flow Batteries)