7 ms·

I wonder what will change between now and 2025 to enable profitability on Bolts?

toomuchtodo 8y ago
Battery manufacturing scaling up, reducing the per kwh cost. Tesla is supposedly near $100/kWh at the cell level (which is the “holy grail” of EV profitability versus petrol vehicles) with Gigafactory 1 production. For comparison, VW wanted to build their own gigafactory and LG Chem is holding them hostage, threatening to not sell them the batteries they need for their EV inititiaves. Funny enough, VW is buying Tesla PowerPacks for their Electrify America charging stations for peak demand shaving (the Electrify America brand is distinct from VW, as VW is not permitted to VW brand the charging stations as part of their dieselgate settlement). Not a Musk fan, but him and JB Straubel knocked it out of the park with their foresight and strategy (build all the batteries we can, sell them in sexy cars).
- ianai 8y ago
  I’m more impressed with this company https://www.greencarreports.com/news/1119299_zinc-air-battery-project-claims-100-kwh-cost-could-be-headed-to-vehicles https://www.greencarreports.com/news/1119299_zinc-air-batter...
  - toomuchtodo 8y ago
    I’m impressed with companies putting batteries in cars today. Moonshots are nice, daily vehicle deliveries is what destroys oil demand.
- ip26 8y ago
  Don't they (Tesla) still just buy the batteries from Panasonic?
  - toomuchtodo 8y ago
    Panosonic manufactures specific chemistries to Tesla specs in the gigafactory. They’ve been a great partner for Tesla, willing to increase cell production investment when demand calls for it (increased production by 30% in 2018Q4).
- walrus01 8y ago
  Along with the $100/kWh figure, increased energy density is a bit part of it as well. Li Ion 18650 cells used to top out at 2500mAh capacity, now Panasonic has the ncr18650ga cell which is rated for brief bursts to 30a discharge and is 3500mAh. Its density is about 250Wh per kilogram. The 20700 and 21700 cells are around 240Wh/kg. The high amperage 18650 cells from LG and Panasonic mean that more are now able to be used in UAV applications, which previously could only use lipo batteries which top out at 177Wh/kg.
ilikehurdles 8y ago
A military conflict or global crisis driving up the price of gasoline.
- dmix 8y ago
  Or the biggest and much more predictable thing in our era: anti-climate change liberal government policy intervention in the marketplace shifting demand regardless of the technological and mass-production economics.
- mrep 8y ago
  I highly doubt that. The US is now the largest producer of oil [0], it looks to keep growing, and "A 2016 conservative estimate set the total world resources of oil shale equivalent to yield of 6.05 trillion barrels (962 billion cubic metres) of shale oil, with the largest resource deposits in the United States accounting for more than 80% of the world total resource. For comparison, at the same time the world's proven oil reserves are estimated to be 1.6976 trillion barrels (269.90 billion cubic metres)" [1]. [0]: https://www.eia.gov/todayinenergy/detail.php?id=37053 https://www.eia.gov/todayinenergy/detail.php?id=37053 [1]: https://en.m.wikipedia.org/wiki/Oil_shale_reserves https://en.m.wikipedia.org/wiki/Oil_shale_reserves
  - rapsey 8y ago
    How are those two related? A panicked futures market during a war can drive up the price.
    - mrep 8y ago
      What war do you imagine would mess up oil production? The only big producers that aren't nuclear powers are in the middle east and we all know how that went down last time in the gulf war.
jdietrich 8y ago
See page 42 of the source report. UBS and Munro predict a 33% reduction in battery costs due to broader industry pricing trends, with a further reduction of 10-25% on powertrain components due to economies of scale and technology improvements. The report argues that the Bolt is already profitable on a contribution basis (sale price - cost of goods sold), meaning that GM make money on every Bolt they sell. What makes the Bolt unprofitable is the high per-unit share of R&D costs and depreciation due to low volumes - the Bolt isn't selling in sufficient quantities to recoup the cost of developing it and putting it into production. The Bolt can become profitable even if manufacturing costs stay the same, simply by selling more units. Demand for the Bolt is substantially outstripping supply in Europe, because high fuel costs mean that pure EVs already have a lower TCO than ICE vehicles; It's likely that GM can achieve profitability simply by ramping up production, assuming that their battery suppliers can keep up with demand. https://neo.ubs.com/shared/d1mFW2YvNRvHXA/ https://neo.ubs.com/shared/d1mFW2YvNRvHXA/
- krrrh 8y ago
  If demand is so high it seems like they could achieve profitability just by raising the price.
  - dmix 8y ago
    Not so simple in such a highly price-sensitive marketplace as the consumer auto industry.
  - whatshisface 8y ago
    Any barrel of oil you produce will find a buyer, but if you sell it for one dollar more than the market price the number of people interested in doing business with you will drop from millions to zero instantly. That's what it means for something to be a commodity. Cars are not quite as bad, but at the same time each car isn't exactly an artisan masterstroke with no substitute.
- benj111 8y ago
  If it isn't profitable due to R & D costs, who's complaining it isn't profitable? I would expect a completely new product category to have higher development costs, I'm not sure its reasonable to shoulder the first fruits of that R & D with all the costs. Especially as this may well literally be the future of the company. So then the question becomes, is someone setting the Bolt up to fail? Trying to make it look bad against Tesla? Or what?
masonic 8y ago
Especially given the innovation in EVs around the world. The Hyundai Kona / Kia Niro are formidable enough, with their super fast-charging successor around the corner.
walrus01 8y ago
I think they are counting on increased global economies of scale and market demand for li ion battery cells to drive down the cost of building the battery pack.

Battery manufacturing scaling up, reducing the per kwh cost. Tesla is supposedly near $100/kWh at the cell level (which is the “holy grail” of EV profitability versus petrol vehicles) with Gigafactory 1 production. For comparison, VW wanted to build their own gigafactory and LG Chem is holding them hostage, threatening to not sell them the batteries they need for their EV inititiaves. Funny enough, VW is buying Tesla PowerPacks for their Electrify America charging stations for peak demand shaving (the Electrify America brand is distinct from VW, as VW is not permitted to VW brand the charging stations as part of their dieselgate settlement). Not a Musk fan, but him and JB Straubel knocked it out of the park with their foresight and strategy (build all the batteries we can, sell them in sexy cars).

ianai 8y ago
I’m more impressed with this company https://www.greencarreports.com/news/1119299_zinc-air-battery-project-claims-100-kwh-cost-could-be-headed-to-vehicles https://www.greencarreports.com/news/1119299_zinc-air-batter...
- toomuchtodo 8y ago
  I’m impressed with companies putting batteries in cars today. Moonshots are nice, daily vehicle deliveries is what destroys oil demand.
ip26 8y ago
Don't they (Tesla) still just buy the batteries from Panasonic?
- toomuchtodo 8y ago
  Panosonic manufactures specific chemistries to Tesla specs in the gigafactory. They’ve been a great partner for Tesla, willing to increase cell production investment when demand calls for it (increased production by 30% in 2018Q4).
walrus01 8y ago
Along with the $100/kWh figure, increased energy density is a bit part of it as well. Li Ion 18650 cells used to top out at 2500mAh capacity, now Panasonic has the ncr18650ga cell which is rated for brief bursts to 30a discharge and is 3500mAh. Its density is about 250Wh per kilogram. The 20700 and 21700 cells are around 240Wh/kg. The high amperage 18650 cells from LG and Panasonic mean that more are now able to be used in UAV applications, which previously could only use lipo batteries which top out at 177Wh/kg.

ilikehurdles 8y ago

A military conflict or global crisis driving up the price of gasoline.

dmix 8y ago
Or the biggest and much more predictable thing in our era: anti-climate change liberal government policy intervention in the marketplace shifting demand regardless of the technological and mass-production economics.
mrep 8y ago
I highly doubt that. The US is now the largest producer of oil [0], it looks to keep growing, and "A 2016 conservative estimate set the total world resources of oil shale equivalent to yield of 6.05 trillion barrels (962 billion cubic metres) of shale oil, with the largest resource deposits in the United States accounting for more than 80% of the world total resource. For comparison, at the same time the world's proven oil reserves are estimated to be 1.6976 trillion barrels (269.90 billion cubic metres)" [1]. [0]: https://www.eia.gov/todayinenergy/detail.php?id=37053 https://www.eia.gov/todayinenergy/detail.php?id=37053 [1]: https://en.m.wikipedia.org/wiki/Oil_shale_reserves https://en.m.wikipedia.org/wiki/Oil_shale_reserves
- rapsey 8y ago
  How are those two related? A panicked futures market during a war can drive up the price.
  - mrep 8y ago
    What war do you imagine would mess up oil production? The only big producers that aren't nuclear powers are in the middle east and we all know how that went down last time in the gulf war.

jdietrich 8y ago

See page 42 of the source report. UBS and Munro predict a 33% reduction in battery costs due to broader industry pricing trends, with a further reduction of 10-25% on powertrain components due to economies of scale and technology improvements. The report argues that the Bolt is already profitable on a contribution basis (sale price - cost of goods sold), meaning that GM make money on every Bolt they sell. What makes the Bolt unprofitable is the high per-unit share of R&D costs and depreciation due to low volumes - the Bolt isn't selling in sufficient quantities to recoup the cost of developing it and putting it into production. The Bolt can become profitable even if manufacturing costs stay the same, simply by selling more units. Demand for the Bolt is substantially outstripping supply in Europe, because high fuel costs mean that pure EVs already have a lower TCO than ICE vehicles; It's likely that GM can achieve profitability simply by ramping up production, assuming that their battery suppliers can keep up with demand. https://neo.ubs.com/shared/d1mFW2YvNRvHXA/ https://neo.ubs.com/shared/d1mFW2YvNRvHXA/

krrrh 8y ago
If demand is so high it seems like they could achieve profitability just by raising the price.
- dmix 8y ago
  Not so simple in such a highly price-sensitive marketplace as the consumer auto industry.
- whatshisface 8y ago
  Any barrel of oil you produce will find a buyer, but if you sell it for one dollar more than the market price the number of people interested in doing business with you will drop from millions to zero instantly. That's what it means for something to be a commodity. Cars are not quite as bad, but at the same time each car isn't exactly an artisan masterstroke with no substitute.
benj111 8y ago
If it isn't profitable due to R & D costs, who's complaining it isn't profitable? I would expect a completely new product category to have higher development costs, I'm not sure its reasonable to shoulder the first fruits of that R & D with all the costs. Especially as this may well literally be the future of the company. So then the question becomes, is someone setting the Bolt up to fail? Trying to make it look bad against Tesla? Or what?

masonic 8y ago

Especially given the innovation in EVs around the world. The Hyundai Kona / Kia Niro are formidable enough, with their super fast-charging successor around the corner.

walrus01 8y ago

I think they are counting on increased global economies of scale and market demand for li ion battery cells to drive down the cost of building the battery pack.