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>The cells that Tesla users for their battery packs are commodity products Not in the volumes Tesla will require over the next decade. I have a hunch that ever
by marvin 7y ago
>The cells that Tesla users for their battery packs are commodity products
Not in the volumes Tesla will require over the next decade. I have a hunch that every EV manufacturer that tries to get serious about volume production (> 1 million vehicles per year, say) will hit a brick wall of supply shortage. There either won't be enough cell production capacity available, or competing manufacturers will bid it up enough to seriously impact the profitability of the vehicles.
Until EVs are established as the obviously best alternative for most vehicles, global production capacity will lag to the degree that in-house battery cell production is a necessary strategic advantage.
Add that to the fact that the ~90% efficiency of electric drivetrains makes single-digit improvements in component properties hugely impactful on the economics of the final product, and battery cells seems like something that should mainly not be outsourced.
- maxerickson 7y agoIf the cells are truly a commodity, the only thing in-sourcing gets you in terms of profit is the opportunity to beat the market on demand prediction (that is, you may over-spend on production and not actually benefit from your capacity predictions). There's a similar effect with the component properties. Really, you are looking at the properties per dollar spent, so if you take a wrong term, in-sourcing costs you relative to the market.