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That is even more unbelievable. What are they implying, nobody else will manufacture batteries? https://www.bloomberg.com/news/articles/2017-06-28/china-is-abo

That is even more unbelievable. What are they implying, nobody else will manufacture batteries? https://www.bloomberg.com/news/articles/2017-06-28/china-is-about-to-bury-elon-musk-in-batteries https://www.bloomberg.com/news/articles/2017-06-28/china-is-...

r00fus 9y ago
It's more of a cost per kWh or total volume advantage they were hoping to secure, I think.
elihu 9y ago
If Tesla has an adequate supply of cells for their needs (due to contracts with Panasonic and their own factory), but other car manufacturers have to compete with each other on the open market for a supply of cells that is inadequate for high-volume production, then that's a big advantage for Tesla in the short/medium term. They can focus 100% on electric, whereas the major manufacturers will have to stick mostly with gas and hybrids for the majority of their revenue. If China were to produce many times more cells than Tesla, we could still have a major battery shortage for most of the world's auto manufacturers.
VintageCool 9y ago
According to an Economist article from Aug 12 2017, the Chinese companies currently in a margin-sacrificing battle to outscale each other. Increasing volume allows them to drive down per-unit costs, so everyone is expanding their production and exceeding the demand for customers. I would be very hesitant to bet on an American company beating the Chinese companies on price and scale for battery production. > But getting prices down this way has not just produced cheaper, better batteries. It has also resulted in significant overcapacity. Cairn ERA estimates that last year the manufacturing capacity for lithium-ion batteries exceeded demand by about a third. Both it and BNEF say that the battery manufacturers are either losing money or making only wafer-thin profits on every electric-vehicle battery they produce. Despite the seeming glut, though, they all have plans to expand, in part to drive prices even lower. Mr Jaffe explains their thinking as that of the “traditional Asian conglomerate model”: sacrificing margins for market share. This may be a sound strategy given the ever-greater hopes for electric vehicles in the near future. But at the moment it is also one that looks rather unnerving. Although Mr Jaffe believes that increased demand for both electric vehicles and stationary storage will justify the rush to expand, he accepts that, for now, “It feels like a gold rush—but there’s no gold.” https://www.economist.com/news/briefing/21726069-no-need-subsidies-higher-volumes-and-better-chemistry-are-causing-costs-plummet-after https://www.economist.com/news/briefing/21726069-no-need-sub...

r00fus 9y ago

It's more of a cost per kWh or total volume advantage they were hoping to secure, I think.

elihu 9y ago

If Tesla has an adequate supply of cells for their needs (due to contracts with Panasonic and their own factory), but other car manufacturers have to compete with each other on the open market for a supply of cells that is inadequate for high-volume production, then that's a big advantage for Tesla in the short/medium term. They can focus 100% on electric, whereas the major manufacturers will have to stick mostly with gas and hybrids for the majority of their revenue. If China were to produce many times more cells than Tesla, we could still have a major battery shortage for most of the world's auto manufacturers.

VintageCool 9y ago

According to an Economist article from Aug 12 2017, the Chinese companies currently in a margin-sacrificing battle to outscale each other. Increasing volume allows them to drive down per-unit costs, so everyone is expanding their production and exceeding the demand for customers. I would be very hesitant to bet on an American company beating the Chinese companies on price and scale for battery production. > But getting prices down this way has not just produced cheaper, better batteries. It has also resulted in significant overcapacity. Cairn ERA estimates that last year the manufacturing capacity for lithium-ion batteries exceeded demand by about a third. Both it and BNEF say that the battery manufacturers are either losing money or making only wafer-thin profits on every electric-vehicle battery they produce. Despite the seeming glut, though, they all have plans to expand, in part to drive prices even lower. Mr Jaffe explains their thinking as that of the “traditional Asian conglomerate model”: sacrificing margins for market share. This may be a sound strategy given the ever-greater hopes for electric vehicles in the near future. But at the moment it is also one that looks rather unnerving. Although Mr Jaffe believes that increased demand for both electric vehicles and stationary storage will justify the rush to expand, he accepts that, for now, “It feels like a gold rush—but there’s no gold.” https://www.economist.com/news/briefing/21726069-no-need-subsidies-higher-volumes-and-better-chemistry-are-causing-costs-plummet-after https://www.economist.com/news/briefing/21726069-no-need-sub...