14 ms·

Tesla is a Battery Company

322 points by jeremyrwelch 12y ago

ethanbond 12y ago
I don't think this is a revelation to anyone who has been paying attention? This seems to have been the dominant hypothesis for a long, long time, and is always what justified Tesla's early (very) red activities. They were a battery company using luxury automobiles to fund battery R&D.
- spb 12y ago
  > I don't think this is a revelation to anyone who has been paying attention? Maybe so, but for casual observers, this lays out the argument very concisely, in a way that might not have been apparent before. (To the average American, "battery company" means Energizer and Duracell, and doesn't seem like a very future-facing sector, so characterizing Tesla as such seems diminutive and hyperbolic.)
  - jeremyrwelch 12y ago
    Exactly my goal. Many on Wall street understand it, but many on Main street (and even many in the Bay area) don't quite get the picture yet.
- DeBraid 12y ago
  Indeed, money managers have been expounding on this thesis for years. "Bond King" Jeff Gundlach remarked to this effect some with Barry Ritholtz on July 2014. https://soundcloud.com/bloombergview/barry-ritholtz-interviews https://soundcloud.com/bloombergview/barry-ritholtz-intervie... Great to see that other are catching on.
- serve_yay 12y ago
  Yes, this has the tone of something revelatory but I agree.
- digitalzombie 12y ago
  It's a revelation to me. I thought Telsa was a car company and I followed them since the beginning until their initial IPO. From there and sorta lost interest in follow any automotive news. Plus it is very easy to see them as a car company, they started out as a car company and Elon came to Tesla, a car company, and took over.
- vidarh 12y ago
  Especially given that they have been selling batteries to Solar City for use by their customers for a while already, and have publicly talked about larger scale production of that. E.g. here's an article from MIT Technology Review from 2013 that touches on Tesla's battery sales to Solar City: http://www.technologyreview.com/news/522226/solarcity-using-tesla-batteries-aims-to-bring-solar-power-to-the-masses/ http://www.technologyreview.com/news/522226/solarcity-using-...
- mstachowiak 12y ago
  Agreed. CTO JB has referred to Tesla as an energy storage company for a while now.
- drzaiusapelord 12y ago
  >They were a battery company using luxury automobiles to fund battery R&D. This seems questionable to me. I just don't see lithium-ion powering electric cars in an affordable or usable fashion. The density isn't great and after 4-5 years the battery pack wears out, making your $30-50k battery investment disappear. There's no resale value on a battery that can't even hold 30% of its original charge. Musk's solar city shenanigans are cute, but not a lot of people are moving to solar when electricity is so cheap. Tesla just never got the battery breakthrough it needed and it will probably never become a hybrid engine company. All this talk of "just wait until Musk does this or does that" has been the same excuse we've been hearing for years. It hasn't materialized, at least for Tesla. $300m losses in 12 months is scary. $100m loss in the past quarter is just bad. Musk can build this factory, but he can't improve lithium-ion tech nor can he raise the price of gas. If gas is under $6 or so, there's very little incentive to buy a pure electric. Fanboyism aside, Tesla just looks like a mess and making excuses about how its really not a car company stinks of desperation. Tesla is pretty much a failed company. Unless they pivot to hybrid engines and start selling a lower cost car, they'll just continue to be the toy of the idle rich.
  - reportingsjr 12y ago
    Wow, you're pulling out some numbers that seem very unfounded here. You also seem to be VERY anti-tesla as seen in your other posts in this thread. Can you show me where you have seen hard evidence of battery packs "wearing out" after 4-5 years? Also, please define wearing out as there are different meanings to that. Contrary to what you have said in this thread the battery life has actually been significantly better than expected (http://www.csmonitor.com/Business/In-Gear/2015/0219/How-much-will-Tesla-Model-S-battery-life-decrease-over-time http://www.csmonitor.com/Business/In-Gear/2015/0219/How-much...) Also, saying the only incentive of buying an electric car to save money is ignoring a lot of other factors in the word.
    - drzaiusapelord 12y ago
      In practice we're seeing ~25% loss of capacity at 40k miles in LEAF real world testing. 30% loss at 50k miles is the accepted norm. Capacity goes down annually after that. It seems that some cars are doing better, but play cars owned by the rich that get very few miles like the early Tesla sportscars. Real world daily-drivers like the LEAF experience the exact decay that was predicted. Lithium-ion isnt some new hot tech we don't understand. We understand it very well. http://www.torquenews.com/2250/how-long-will-electric-vehicle-batteries-last-tesla-s-roadster-could-be-guide http://www.torquenews.com/2250/how-long-will-electric-vehicl... Americans replace their car every 6 years now. You may have 30-50% capacity at year 6, depending on a lot of factors. This is unacceptable considering the anemic range of a new battery. EV means losing almost all your car's value after 3-5 years. High trade-in values we enjoy now will be lost as the majority of the cost of the vehicle will be its battery. These batteries will fill landfills and be an environmental disaster. The current "fix" is just to build the battery replacement cost into the warranty. So now your car is more expensive. Warranty claims now become a legal struggle over what is faulty or not. Nissan claims 70% battery power is non-faulty. That means your 75m LEAF range is now ~50m. My gas car gets that in a gallon and a half. >You also seem to be VERY anti-tesla as seen in your other posts in this thread. Its a 12 year old company that has done nothing but burn money. They have no mature product on the horizon and their promises of making a middle-class cheap EV with great range and durability are just not in the realm of technology. The stock has been on a decline since mid last year and they have a celebrity CEO who is good at PR and gimmicks but not delivering affordable vehicles. >Also, saying the only incentive of buying an electric car to save money This is the only motivator for mass market acceptance. The idle rich love the acceleration of that $100k car, but that doesn't matter to someone who makes half or a third that in a year.
- torbit 12y ago
  True. I've already seen an article like this. This also gave a reason why they wanted their supercharging stations everywhere, at cheap price, and open patents. I'm not sure, but I doubt he opened his patents on the battery.
iamcurious 12y ago
Also, wasn't Musk going to do a phd studying batteries before deciding that the internet was a better move for him at the time?
- deleted 12y ago
  [deleted]
- jeremyrwelch 12y ago
  Didn't know about this. Source?
  - iamcurious 12y ago
    https://www.iop.org/careers/working-life/profiles/page_57723.html https://www.iop.org/careers/working-life/profiles/page_57723... How did your career progress from there? I was offered a place at Stanford University to do postgraduate research into high-energy-density capacitors. But then the Internet came along, and I wanted a piece of the action.
    - jeremyrwelch 12y ago
      thanks! added it to the post
  - vonklaus 12y ago
    Most of his talks he mentions this. He was doing a PHD to study ultra-capacitors, or at least, was accepted to UPENN with that intention. He left to start zip2. He has also mentioned that a part of the reason he didn't proceed was that his research was very theoretical and it would've been able to find (or disprove) of a method after years pf study. He mentions some of the other breakthroughs on iltra-capacitors having the efficiency of a lead battery, but, while extremely efficient, the prototype used an extremely rare material that only was mined in a few tonnes a year. Thus the solution could never scale.
  - the_rosentotter 12y ago
    Musk has been known to embellish his academic record, it was detailed during the court case against Tesla's original founder Martin Eberhard: http://evworld.com/pdf/eberhardvmusk.pdf http://evworld.com/pdf/eberhardvmusk.pdf According to court documents he has never had any association with Stanford university, and, contrary to public statements, among them SEC filings, has no degrees beyond a Bachelor of Science in Economics from PennU.
steakejjs 12y ago
What's wrong with being more than one thing. They are shaking up A LOT about how we currently think about the ``energy'' models. I think batteries are going to do wonder for countries that don't have a ``grid''. The coolest thing to me about Tesla is the car is becoming decoupled from what powers the car. It's still electricity but if my power provider was to switch to nuclear, solar, people on bicycles, or coal It would be transparent to me.
deleted 12y ago
[deleted]
smt88 12y ago
Only as much as Apple was a HDD company with the release of the first iPod. Yes, their underlying hardware was necessary for the product to be revolutionary, and it was also something that no one else could produce at the time. But, like Tesla, Apple added a layer of design and marketing that made for a revolutionary UX, as well. So I agree that Tesla is a battery company, but I don't think that that makes them less of a revolution for the car industry.
- rbanffy 12y ago
  Apple never manufactured their own iPod hard drives. That's where the similarity ends. Advancing the state of the art in batteries is essential for Tesla to remain competitive. For Apple, it was adding content and services.
  - smt88 12y ago
    Apple was (and still is, in some cases) a leader in miniaturization. They made a product viable that was never viable before. Other drives were too big, expensive, and power-hungry. Apple made the iPod a common device because it was the first MP3 player with more storage than most people would need, it only cost a few hundred, and its battery lasted a long time. Apple continued to compete by getting even better at miniaturization, like when they introduced the iPhone. Eventually we're going to be arguing semantics, but my point still stands. Being the leader at manufacturing the boring internal components was necessary for both companies to provide the product that we perceive to be their core competency. Edit: I forgot to address your point about manufacturing. They may not have manufactured the drives or had a unique technology, but they had advantages in manufacturing that no one else had. Tesla seems to be the same way, from what I can tell.
- notatoad 12y ago
  As Apple has never made hard drives, calling them a hard drive company makes zero sense. The hard drive in the iPod was never the most interesting component, or the differentiator from the rest of the market. Tesla's battery is. The hard drive in the iPod is like the wheels on a Tesla. It's useless without them, but they're a completely replaceable commodity and has no bearing on the success of the product
InclinedPlane 12y ago
Of course. But it's not as though Tesla's cars are just useless, uninteresting husks. They are also a very competent car company, especially for being so young. But their core competency is definitely in batteries.
happertiger 12y ago
If Tesla executes, they are going to be the leading company in a number of industries, of which battery technology and manufacturing is one of them. They are also leaders in direct sales, JIT manufacturing, motor design, any one of which is a disruptive innovation channel they could monetize, all in the service of building electric cars. Tesla is an energy company, a battery company, a car company, etc, just as GE or any other innovator ends up in many segments. What they are is a nascent Multi-business, Multi-national company that the market is betting (based on the stock price) is going to be able to be a global force. A lot of publicly traded companies are single-business companies that derive most of their revenues from a domestic operation. The few companies that manage to become multinationals have this outsized influence because they tend to drive massive revenues, earnings, and markets caps. The correlation between operating in multiple business areas and being a massive multinational is a direct relationship, because disruptive businesses always reach a saturation point. Businesses like Tesla that set out to disrupt industries that represent significant portions of GDP will naturally need to move into multiple markets in order to execute their strategies, because they need to disrupt or create a sequence of disruptive or creative strategies in order to reach that saturation point (natural market size). I love Elon for the fact that he thinks of his businesses on a planetary basis, and if you consider the point, you'll see he's actually executing Tesla in multiple markets simultaneously, and essentially going directly from startup to Multinational, and skipping the domination of a single category. He knows that if he doesn't, he's going to face stiff competition from entrenched companies and it's likely he'll lose his advantage. But by tight control of the supply line businesses, and a few strategic relationships with existing multinationals, he's able to elevate Tesla into a multi-business, multi-national organization in record time. Sure, they're a battery company, but what they really are is an organization that's shooting for the moon and actually executing at that scale. Simple incredible to watch.
- lugg 12y ago
  I simply cannot wait for the biography. I really find this story to be more interesting than any other in similar vein. I really want to know did he start out with this plan or did he simply see batteries as being the easiest thing to improve on by multiples compared to alternatives. Perhaps better said, there are many parts to a car that could be innovated on to such great improvements but the battery in electric cars really needed to be improved by an order of magnitude to make them competitive with petrol power. Was it that fact that drove him to move into the global space using batteries or was moving global going to happen with whatever he needed to do to improve over the competition so much?
deepinsand 12y ago
The article assumes that car batteries will feed into the grid. Tesla seems to think that won't be the case, car batteries need to be secured against harsh outdoor conditions and have tougher charge cycle limits.
- jeremyrwelch 12y ago
  Tesla deploys a large battery product at all of their Supercharger locations. These batteries are built to withstand harsher weather conditions, and will likely form the basis for a home battery product.
DenisM 12y ago
Musk has previously said in an interview that Li-Ion batteries were at $600 / kwh, but when he looked at the component and manufacturing costs they were at $100 / kwh. Somehow the entire supply chain has piked up a lot of overhead, and he realized it would be possible to reduce that. At those prices, Model-S battery pack costs are between $36k and $51k! When I realized that, I came to conclusion that Tesla Motors could be viewed as merely a stepping stone on the way to building a Gigafactory. When demand for batteries is low, a low-volume battery factory has to share its suppliers with other clients, and those suppliers will price their risks and profits into the deal, multiple times along the chain. On the other hand if you have enough volume to justify having the entire manufacturing cycle under one roof, from ore to ready packages, all those markups go out the window. It wouldn't surprise me to see overhead going from the staggering 500% to a more moderate 50%, but only as long as there is enough demand for all of those batteries. Which is why you need cars - they consume a lot of energy. By now it's pretty much certain that Tesla will be the first to build a Gigafactory. The interesting bit is whether Musk figured out a way to make sure no one has the ability to build a competing Gigafactory and commoditize the business. Right now only Tesla itself can generate enough demand, so they are pretty safe. If Musk can convince the other car manufacturers to buy batteries from Tesla, it will kill the incentive for anyone else to build a competing Gigafactory for a long time. So at the least Musk needs to appear non-threatening to other car manufacturers, and perhaps the best move would be to split battery division away from Tesla Motors completely.
- jeremyrwelch 12y ago
  Great points here. I think Tesla's move to open source their patents was for these reasons exactly.
- faitswulff 12y ago
  I'm sorry, but what is a Gigafactory?
  - tim333 12y ago
    http://en.wikipedia.org/wiki/Gigafactory http://en.wikipedia.org/wiki/Gigafactory
thrownaway2424 12y ago
I don't get this article. The battery in a Tesla Model S is literally a huge array of Panasonic flashlight batteries. It is an off-the-shelf catalog item you can order from Panasonic. Admittedly, you should probably have prior arrangements before ordering millions. The central insight of the Tesla founders was that people really will pay $85000 for an electric car. The other auto makers didn't believe that.
- gsnedders 12y ago
  And there's some deal with Panasonic for the Gigafactory as well — it sounds very much like it'll be manufacturing stuff that's basically Panasonic IP to start with.
- r00fus 12y ago
  You say electric car like it's some souped up Prius (I own a Prius). The Tesla Model-S is an amazing vehicle that's not only electric but amazing to look at and drive. As an aspirational status symbol it's got a hell of a lot of cachet 3 years after it's introduction. That's a feat of product marketing and engineering.
  - thrownaway2424 12y ago
    Absolutely an achievement of marketing worthy of the best marketeers in history. But the article is wrong on it's face when it states "the Battery Tech they Developed While Building EVs" because Tesla has not developed any battery technology of any kind, ever.
- pdonis 12y ago
  > The battery in a Tesla Model S is literally a huge array of Panasonic flashlight batteries. It is an off-the-shelf catalog item you can order from Panasonic. Um, no. Viewing the battery of a Tesla Model S as just a big flashlight battery misses the whole point of what Tesla is doing. A flashlight battery does one thing: it discharges energy until it's empty. Even an ordinary rechargeable household battery only does two things: it recharges, and then it discharges. The battery in a Tesla Model S, OTOH, is continuously computing whether to charge or discharge, how much to charge or discharge, what its current state of charge is, how to manage charging and discharging to maximize its life, etc. And it has to do this in a constantly changing environment--a car that is traveling at varying speeds over varying types of roads. (Doing it for a home battery is actually easier, in a way, because there is less variability in the load.) This sort of technology is absolutely critical if batteries are going to become significant in our energy budget on a large scale. The energy storage medium of the battery is only a tiny piece of the whole picture.
pbreit 12y ago
Article fails to mention that Tesla has actually stated that it intends to market a home battery and that many believe this is the product that Elon referenced recently.
themodelplumber 12y ago
Totally ignorant of the tech here, but could they now do Netflix for Batteries? $9 / mo. gets you all the AA, AAA, D cells you require?
- ctdonath 12y ago
  It's all about the tech. Not disposable cells on the "one to a dozen" scale, but rechargeables by the cubic meter: wanna drive a car 300 miles? Tesla batteries. Wanna buffer your house power, daytime power demand at nighttime costs, or nighttime power use from solar? Tesla batteries. Anything you'd put gasoline in for high-power untethered use? Tesla batteries. Remember: the first Tesla car was powered by an enormous number of laptop batteries (basically AAs by the hundreds/thousands). Current battery technology insufficient (your phone only lasts a day on a charge, or your electric car only gets 100 miles)? now that he's getting demand up for big-money big-volume batteries, Musk can fund battery research and production on a scale way beyond anything we've seen. Remember: Musk's "gigafactory" project is intended to build more batteries than the entire world currently produces.
- anonbanker 12y ago
  can I borrow this idea for my startup? how much will I need to pay you?
bs_bishop 12y ago
Interesting to consider --- is there enough lithium in the world to support this stuff? http://large.stanford.edu/courses/2010/ph240/eason2/ http://large.stanford.edu/courses/2010/ph240/eason2/
- anon4 12y ago
  Can't lithium batteries be recycled?
  - peterfirefly 12y ago
    Yes. http://www.teslamotors.com/blog/mythbusters-part-3-recycling-our-non-toxic-battery-packs http://www.teslamotors.com/blog/mythbusters-part-3-recycling... http://www.teslamotors.com/blog/teslas-closed-loop-battery-recycling-program http://www.teslamotors.com/blog/teslas-closed-loop-battery-r...
    - ridgeguy 12y ago
      Thanks for these. The second link notes that the lithium battery recycling is profitable. Do you know of any links to more detailed economics of lithium battery recycling? I'm trying to estimate the cost of Li batteries in a fully recycling system at equilibrium, and I'm not finding any detailed cost/revenue breakdowns. Thank you.
      - peterfirefly 12y ago
        No, sorry. I'd be interested as well.
- ams6110 12y ago
  Sounds like between using lithium in car batteries as well as for household and industrial energy storage, "peak lithium" might be a real possibility.
- deleted 12y ago
  [deleted]
leoc 12y ago
Aren't they mainly a subsidy company?
stox 12y ago
And McDonalds is a Real Estate company.
- ctdonath 12y ago
  I've realized that Pepsi owns Taco Bell just to sell more drinks.
- hugodahl 12y ago
  Yep, in a very tight race with CBRE for top spot. I wonder if there's a place to find sick information, like the Forbes richest list.
kostyk 12y ago
Elon Musk: Evangelist http://www.thegadflyreview.com/elon-musk-evangelist/#.VRyqe_nF-So http://www.thegadflyreview.com/elon-musk-evangelist/#.VRyqe_...
snowwrestler 12y ago
If true, this puts Tesla and Solar City in complementary positions, and perhaps on track to become the same company under Musk. Solar City tech generates the electricity, and Tesla batteries will store it.
jkestner 12y ago
Don't ignore the other battery companies. http://www.pcworld.com/article/2900452/foxconn-partners-with-chinas-tencent-on-smart-electric-cars.html http://www.pcworld.com/article/2900452/foxconn-partners-with... Foxconn hopes to build cars priced under US$15,000, according to Gou. The contract manufacturer already develops electric car batteries, which he said were in demand. Look out, Tesla. Being that the batteries are the expensive part of an electric car, Foxconn could get to the mass market before Tesla, and possibly set back the market if the experience sucks.
- coryl 12y ago
  Does Foxconn have much expertise in manufacturing batteries?
  - henkboyd 12y ago
    Maybe not as much, but Apple has been "poaching" Tesla's engineers.
zeeshanm 12y ago
Selling batteries def have helped them with keeping the lights on. Not sure if many remember but Tesla was about to go under water at some point before cutting a deal with this German car company to sell them batteries.
chatmasta 12y ago
Also consider: - solar city benefits from increased storage capabilities of batteries. Solar panels (a capital investment) generate higher returns when they also power buildings at night. - National electric grids benefit from increased battery storage because they can store electricity for hours after it's actually generated. - tesla is building a network of superchargers all connected to the electric grid - tesla has arguably more at stake than any company in battery R&D. Few if any companies are as motivated as tesla for battery tech to improve. My hypothesis is that Elon Musk is architecting Tesla as the "cloud" of electricity generation, storage, and transfer. He is building the ultimate smart grid. Electric cars are a nice excuse to develop the requisite network effects and initial momentum before expanding to other verticals. He's going from a red ocean to a blue ocean. [1] http://en.m.wikipedia.org/wiki/Blue_Ocean_Strategy http://en.m.wikipedia.org/wiki/Blue_Ocean_Strategy
- saryant 12y ago
  How on earth can a strategy centered around generating, storing and transmitting electricity be considered blue-ocean?
  - sparkman55 12y ago
    Well, the innovation is really about storing electricity. We've been generating and transmitting electricity for over a century now. Once we can store electricity (in batteries, for example), then intermittent power sources, like solar panels (and also wind turbines) become much more valuable. Energy storage is a very inconsequential market right now, but if smart-grid-connected Teslas really take off, then they become important not only to the automotive industry, but also the electricity and energy industries.
    - lotsofmangos 12y ago
      Once solar cells hit a tipping point, storage becomes one of the best businesses to be in.
fivedogit 12y ago
Wrong. Tesla is a distribution company. Cars and batteries are commodities, more or less. Corporations are now extremely efficient at copying and commoditizing their competitors' innovations - just look at how fast the android ecosystem popped up alongside iPhone - so technological advancements are not the real source of long term value but merely the temporary advantage needed to be first to a market and set up network effects. EBay, for instance, was there at the right time to take recent technology advancements, set up a network-effect marketplace and milk it for, oh, 2 decades. They stopped being a technology company a long time ago. So how does this relate to Tesla? Answer: The supercharging stations. If Tesla owns the most charging stations then EV buyers have a good reason to buy Tesla over a hypothetical Ford or Toyota EV, putting Tesla at a major advantage. Eventually it'll be on Ford and Toyota to bet the farm on a massive supercharger network of their own and launch an EV to compete against Tesla's entrenched domination of the marketplace. Right now, Tesla is in a fleeting moment of technological and branding advantage which they are correctly leveraging to quickly set up their charging network. It's a lot like telcos bragging about their coverage networks. Eventually all the (surviving) car companies will be doing something similar, running TV ads about their charging station maps. Companies are either A) marketing companies or B) distribution companies or a blend of both. Nike is a marketing company that happens to sell shoes. Ditto Taco Bell and cheap Mexican food. Amazon, Akamai, Google and Facebook are distribution companies --- they own the network or marketplace. Disney (mostly distribution), American Airlines (mostly distributiom) Walmart (mostly distribution) and Apple (mostly marketing/branding, but appstore and itunes are distribution powerhouses) are a little of both. Edit: Nielsen, Google are distribution comapnies. They have prohibitively large or complicated information ingestion systems set up to and then resell the results. Newspapers and TV are too, but their distribution monopolies are crumbling. Interesting. That means solar advancements are very bad for Tesla. If people don't need to stop and charge, then the distribution network is worthless.
- jeremyrwelch 12y ago
  I generally agree with your categorization, but I would be more specific that Tesla is both a Battery distribution AND marketing company. EVs existed prior to Tesla, but they were the first company to identify and correctly serve the high end market with the Roadster. My company Chrg specializes in charging infrastructure. Note that the Superchargers you mentioned actually use specially designed Tesla batteries, which are precursors to the Home battery product Tesla will likely be launching soon. Solar advancements are a great thing for Tesla. Once power is captured via solar panels, it will need to be stored – preferably in Tesla batteries.
otar 12y ago
And Google is a search engine...
- jeremyrwelch 12y ago
  Google is an advertising company with a monopoly on a specific native ad type called "search ads"
apendleton 12y ago
I'm sort of curious how the economics of this will end up working out from a consumer's perspective. Lithium ion's big advantage was energy density -- you can store a lot of juice for not much mass or volume, which is a really big deal for portable electronics or cars... for a stationary home installation, though, much less so. Having a giant thing sitting in your backyard might be okay if it was high-capacity and cheap, and it seems like there might be other contenders besides Li-ion that might do well given the different set of operating constraints that stationary storage would have. Maybe other battery chemistries, or maybe kinetic energy storage devices like evacuated flywheels, compressed air, etc....
- TeMPOraL 12y ago
  > Having a giant thing sitting in your backyard might be okay if it was high-capacity and cheap There are also walls you could embed batteries in. A house has a lot of surface area that could be used to store energy.
  - stcredzero 12y ago
    Embedding Li-ions in your walls -- it's safer than embedding gasoline tanks in your walls. It's still far from a good idea, though.
- Brakenshire 12y ago
  Energy density is still important for home installations, especially if you have ambitions of retro fitting on a wide scale. If you could get to a situation where solar + battery was cheaper than a grid connection, a majority of the population will still not buy it if it's something which will require a half tonne object to be installed on a specially constructed concrete plinth, brought on a lorry with a crane system, and taking up 2m x 1m of space. Far, far better if it can be within the size and weight range of a normal white box utility, for instance the kind of freezer that people put in their garage.
  - HeyLaughingBoy 12y ago
    In the rural or suburban US, it is very common for homes to have large propane tanks for heating and cooking, due to them being too far away from supply lines for natural gas. The tank is typically much larger than your example. Not to mention essentially all new homes have central A/C with one of the heat exchangers "installed on a specially constructed concrete plinth." We have plenty of space; it's simply not an issue.
_nedR 12y ago
>In the NY Metro area, it’s Con Edison That is a rather unfortunate (or rather appropriate) name for a company named after Edison.
- peterfirefly 12y ago
  Especially in French.
Animats 12y ago
Tesla is not a battery company until they actually start manufacturing batteries.
richardw 12y ago
I can't see Musk trying to build a battery company as his primary focus. That's not exactly a world-changing life goal (well, for him. I'd be happy with that). That's like saying that Apple is a chip company because their chips are central to efficiency. The battery might currently be the most important single component of an EV, but there is no guarantee that will be true in five/ten/twenty years. The car is more than just a mechanism to increase scale. You don't beat Musk by making a better battery company. You'd better find a way to beat this: http://www.businessinsider.com/the-tesla-model-s-is-consumer-reports-top-pick--for-the-second-year-in-a-row-2015-2 http://www.businessinsider.com/the-tesla-model-s-is-consumer... (The word 'battery' is not even mentioned in the article. Tesla could have less battery life but still win.) Again, similar to Apple, Tesla found a point of advantage and will own it. The landscape will change and so will Tesla's efforts at building or maintaining an advantage against some very powerful companies.
- weavie 12y ago
  Batteries may appear quite humble, but they are at the core of just about every technological advancement we have at the minute. Cars, laptops, phones, wearable devices.. they all depend on batteries. At the minute battery life is a real bottleneck for us. We are turning into a nation that plans their life around moving from charging station to charging station. Batteries are heavy and they don't last that long. The next truly world changing advancement is going to have to involve making access to energy much less heavy.
- danmaz74 12y ago
  I have no idea if batteries are Musk's primary focus here, but creating very cheap and dense storage for electricity WOULD be as world-changing as you can get: if you solve that problem, you can't just replace combustion engines in cars, you can also use solar and wind power for base load on the grid. This would be much more world-changing than cheap rockets.
- dagw 12y ago
  That's not exactly a world-changing life goal An order of magnitude or two improvement of current battery technology will fundamentally change the world in ways we can hardly imagine. A cool electric car is nothing in comparison.
joshfraser 12y ago
They're also a software company. I was recently shocked to hear that ~60% of Tesla employees are involved in software engineering, versus a normal car company at around 2%. Source: http://www.businessinsider.com/morgan-stanley-tesla-multiply-stock-worlds-most-important-car-company-2015-3 http://www.businessinsider.com/morgan-stanley-tesla-multiply...
stevewilhelm 12y ago
> Tesla is a Battery Company Too narrow. Tesla is a electrical energy storage and distribution company. Tesla has over 400 Supercharger stations. I think this quote sums it up: “I see us more as an energy innovation company, at our core, than even as a car company.”
astrocat 12y ago
Batteries are to devices what rockets are to space...things. So there's a trend here.
ck2 12y ago
Except we need an exponential leap in battery technology. These 1% per year improvements are going to take forever to get us better EVs
- eru 12y ago
  But 1% a year IS exponential.
yogurt 12y ago
Tesla is no more a battery company than Amazon is a shipping company.
- kdawn 12y ago
  Every company needs a platform to attack other markets and industries from. Build fast and break into other accessible applications of your product or service.
yogurt 12y ago
Tesla is no more a battery company than Amazon is a shipping company.
kamikrazy 12y ago
Having a "Tesla battery pack" at your home is more than just handling grid fluctuations. What if the battery pack can act as a supercharger for your car? It's like having a tank of gas in your garage all the time.
- hnnewguy 12y ago
  >It's like having a tank of gas in your garage all the time. And how many people care to have a tank of gas in their garage all the time, even though the idea is completely feasible today?
efremjw 12y ago
Whose battery IP does Tesla use?
- SEJeff 12y ago
  Panasonic, source: http://www.teslamotors.com/blog/panasonic-and-tesla-sign-agreement-gigafactory http://www.teslamotors.com/blog/panasonic-and-tesla-sign-agr... http://en.wikipedia.org/wiki/Tesla_Model_S#Battery http://en.wikipedia.org/wiki/Tesla_Model_S#Battery
jagtesh 12y ago
Just like how Apple is a chip fabrication company? I don't think so. Tesla was the first company to introduce OTA updates, something unheard of in the car industry. So to call them a battery company sounds very patronizing to me.
- drzaiusapelord 12y ago
  Except Apple is successful and Tesla is not. When articles like these come out for a company bleeding money its something to worry about. I think its obvious the lithium-ion just doesn't have the lifespan and density to replace cars. At least when gas is under $6 a gallon. After 4-5 years the resale value of that $30k battery pack is non-existant as its begining to fail. We're seeing this a lot with hybrid sales where the car's battery pack has a fraction of its capacity. The makes the motor work harder, but with a pure EV car there is no gas motor to take up the slack. I have very low hopes for EVs. Even if Tesla lowered battery prices by 20%, which would be impressive, they're still extremely expensive and still wear out quickly. They make sense when gas is crazy expensive, but its not, especially with all this investment in shale oil. I imagine the future will have more efficient hybrids and perhaps Tesla will migrate to a hybrid company if they want to stay alive. 100k for a range anxiety inducing EV with a low resale value after x years due to its $50k battery pack wearing out is not the vision of the future here.
  - jagtesh 12y ago
    Do they have to be profitable? Yes. Will they move to manufacturing hybrids? Probably. But they're definitely not a battery company. At least not yet.
felixbraun 12y ago
Tesla's goal is to accelerate the advent of sustainable transport. They want (a) to see as many electric cars on the road as fast as possible and (b) make a lot of money. B is required to perfect the product -- which serves A better than anything else. I think the 'Apple way' is most efficient: selling the whole package and making it so good, that people happily pay a lot.
- e12e 12y ago
  I'm not sure how cars will ever constitute "sustainable transport". Less unsustainable than carbon fuelled cars, maybe. And that's a big maybe, given batteries, power generation etc. But I suppose there's not that much money in trying to sell bicycles...

322 points by jeremyrwelch 12y ago

I don't think this is a revelation to anyone who has been paying attention? This seems to have been the dominant hypothesis for a long, long time, and is always what justified Tesla's early (very) red activities. They were a battery company using luxury automobiles to fund battery R&D.

spb 12y ago
> I don't think this is a revelation to anyone who has been paying attention? Maybe so, but for casual observers, this lays out the argument very concisely, in a way that might not have been apparent before. (To the average American, "battery company" means Energizer and Duracell, and doesn't seem like a very future-facing sector, so characterizing Tesla as such seems diminutive and hyperbolic.)
- jeremyrwelch 12y ago
  Exactly my goal. Many on Wall street understand it, but many on Main street (and even many in the Bay area) don't quite get the picture yet.
DeBraid 12y ago
Indeed, money managers have been expounding on this thesis for years. "Bond King" Jeff Gundlach remarked to this effect some with Barry Ritholtz on July 2014. https://soundcloud.com/bloombergview/barry-ritholtz-interviews https://soundcloud.com/bloombergview/barry-ritholtz-intervie... Great to see that other are catching on.
serve_yay 12y ago
Yes, this has the tone of something revelatory but I agree.
digitalzombie 12y ago
It's a revelation to me. I thought Telsa was a car company and I followed them since the beginning until their initial IPO. From there and sorta lost interest in follow any automotive news. Plus it is very easy to see them as a car company, they started out as a car company and Elon came to Tesla, a car company, and took over.
vidarh 12y ago
Especially given that they have been selling batteries to Solar City for use by their customers for a while already, and have publicly talked about larger scale production of that. E.g. here's an article from MIT Technology Review from 2013 that touches on Tesla's battery sales to Solar City: http://www.technologyreview.com/news/522226/solarcity-using-tesla-batteries-aims-to-bring-solar-power-to-the-masses/ http://www.technologyreview.com/news/522226/solarcity-using-...
mstachowiak 12y ago
Agreed. CTO JB has referred to Tesla as an energy storage company for a while now.
drzaiusapelord 12y ago
>They were a battery company using luxury automobiles to fund battery R&D. This seems questionable to me. I just don't see lithium-ion powering electric cars in an affordable or usable fashion. The density isn't great and after 4-5 years the battery pack wears out, making your $30-50k battery investment disappear. There's no resale value on a battery that can't even hold 30% of its original charge. Musk's solar city shenanigans are cute, but not a lot of people are moving to solar when electricity is so cheap. Tesla just never got the battery breakthrough it needed and it will probably never become a hybrid engine company. All this talk of "just wait until Musk does this or does that" has been the same excuse we've been hearing for years. It hasn't materialized, at least for Tesla. $300m losses in 12 months is scary. $100m loss in the past quarter is just bad. Musk can build this factory, but he can't improve lithium-ion tech nor can he raise the price of gas. If gas is under $6 or so, there's very little incentive to buy a pure electric. Fanboyism aside, Tesla just looks like a mess and making excuses about how its really not a car company stinks of desperation. Tesla is pretty much a failed company. Unless they pivot to hybrid engines and start selling a lower cost car, they'll just continue to be the toy of the idle rich.
- reportingsjr 12y ago
  Wow, you're pulling out some numbers that seem very unfounded here. You also seem to be VERY anti-tesla as seen in your other posts in this thread. Can you show me where you have seen hard evidence of battery packs "wearing out" after 4-5 years? Also, please define wearing out as there are different meanings to that. Contrary to what you have said in this thread the battery life has actually been significantly better than expected (http://www.csmonitor.com/Business/In-Gear/2015/0219/How-much-will-Tesla-Model-S-battery-life-decrease-over-time http://www.csmonitor.com/Business/In-Gear/2015/0219/How-much...) Also, saying the only incentive of buying an electric car to save money is ignoring a lot of other factors in the word.
  - drzaiusapelord 12y ago
    In practice we're seeing ~25% loss of capacity at 40k miles in LEAF real world testing. 30% loss at 50k miles is the accepted norm. Capacity goes down annually after that. It seems that some cars are doing better, but play cars owned by the rich that get very few miles like the early Tesla sportscars. Real world daily-drivers like the LEAF experience the exact decay that was predicted. Lithium-ion isnt some new hot tech we don't understand. We understand it very well. http://www.torquenews.com/2250/how-long-will-electric-vehicle-batteries-last-tesla-s-roadster-could-be-guide http://www.torquenews.com/2250/how-long-will-electric-vehicl... Americans replace their car every 6 years now. You may have 30-50% capacity at year 6, depending on a lot of factors. This is unacceptable considering the anemic range of a new battery. EV means losing almost all your car's value after 3-5 years. High trade-in values we enjoy now will be lost as the majority of the cost of the vehicle will be its battery. These batteries will fill landfills and be an environmental disaster. The current "fix" is just to build the battery replacement cost into the warranty. So now your car is more expensive. Warranty claims now become a legal struggle over what is faulty or not. Nissan claims 70% battery power is non-faulty. That means your 75m LEAF range is now ~50m. My gas car gets that in a gallon and a half. >You also seem to be VERY anti-tesla as seen in your other posts in this thread. Its a 12 year old company that has done nothing but burn money. They have no mature product on the horizon and their promises of making a middle-class cheap EV with great range and durability are just not in the realm of technology. The stock has been on a decline since mid last year and they have a celebrity CEO who is good at PR and gimmicks but not delivering affordable vehicles. >Also, saying the only incentive of buying an electric car to save money This is the only motivator for mass market acceptance. The idle rich love the acceleration of that $100k car, but that doesn't matter to someone who makes half or a third that in a year.
torbit 12y ago
True. I've already seen an article like this. This also gave a reason why they wanted their supercharging stations everywhere, at cheap price, and open patents. I'm not sure, but I doubt he opened his patents on the battery.

iamcurious 12y ago

Also, wasn't Musk going to do a phd studying batteries before deciding that the internet was a better move for him at the time?

deleted 12y ago
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jeremyrwelch 12y ago
Didn't know about this. Source?
- iamcurious 12y ago
  https://www.iop.org/careers/working-life/profiles/page_57723.html https://www.iop.org/careers/working-life/profiles/page_57723... How did your career progress from there? I was offered a place at Stanford University to do postgraduate research into high-energy-density capacitors. But then the Internet came along, and I wanted a piece of the action.
  - jeremyrwelch 12y ago
    thanks! added it to the post
- vonklaus 12y ago
  Most of his talks he mentions this. He was doing a PHD to study ultra-capacitors, or at least, was accepted to UPENN with that intention. He left to start zip2. He has also mentioned that a part of the reason he didn't proceed was that his research was very theoretical and it would've been able to find (or disprove) of a method after years pf study. He mentions some of the other breakthroughs on iltra-capacitors having the efficiency of a lead battery, but, while extremely efficient, the prototype used an extremely rare material that only was mined in a few tonnes a year. Thus the solution could never scale.
- the_rosentotter 12y ago
  Musk has been known to embellish his academic record, it was detailed during the court case against Tesla's original founder Martin Eberhard: http://evworld.com/pdf/eberhardvmusk.pdf http://evworld.com/pdf/eberhardvmusk.pdf According to court documents he has never had any association with Stanford university, and, contrary to public statements, among them SEC filings, has no degrees beyond a Bachelor of Science in Economics from PennU.

steakejjs 12y ago

What's wrong with being more than one thing. They are shaking up A LOT about how we currently think about the ``energy'' models. I think batteries are going to do wonder for countries that don't have a ``grid''. The coolest thing to me about Tesla is the car is becoming decoupled from what powers the car. It's still electricity but if my power provider was to switch to nuclear, solar, people on bicycles, or coal It would be transparent to me.

deleted 12y ago

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smt88 12y ago

Only as much as Apple was a HDD company with the release of the first iPod. Yes, their underlying hardware was necessary for the product to be revolutionary, and it was also something that no one else could produce at the time. But, like Tesla, Apple added a layer of design and marketing that made for a revolutionary UX, as well. So I agree that Tesla is a battery company, but I don't think that that makes them less of a revolution for the car industry.

rbanffy 12y ago
Apple never manufactured their own iPod hard drives. That's where the similarity ends. Advancing the state of the art in batteries is essential for Tesla to remain competitive. For Apple, it was adding content and services.
- smt88 12y ago
  Apple was (and still is, in some cases) a leader in miniaturization. They made a product viable that was never viable before. Other drives were too big, expensive, and power-hungry. Apple made the iPod a common device because it was the first MP3 player with more storage than most people would need, it only cost a few hundred, and its battery lasted a long time. Apple continued to compete by getting even better at miniaturization, like when they introduced the iPhone. Eventually we're going to be arguing semantics, but my point still stands. Being the leader at manufacturing the boring internal components was necessary for both companies to provide the product that we perceive to be their core competency. Edit: I forgot to address your point about manufacturing. They may not have manufactured the drives or had a unique technology, but they had advantages in manufacturing that no one else had. Tesla seems to be the same way, from what I can tell.
notatoad 12y ago
As Apple has never made hard drives, calling them a hard drive company makes zero sense. The hard drive in the iPod was never the most interesting component, or the differentiator from the rest of the market. Tesla's battery is. The hard drive in the iPod is like the wheels on a Tesla. It's useless without them, but they're a completely replaceable commodity and has no bearing on the success of the product

InclinedPlane 12y ago

Of course. But it's not as though Tesla's cars are just useless, uninteresting husks. They are also a very competent car company, especially for being so young. But their core competency is definitely in batteries.

happertiger 12y ago

If Tesla executes, they are going to be the leading company in a number of industries, of which battery technology and manufacturing is one of them. They are also leaders in direct sales, JIT manufacturing, motor design, any one of which is a disruptive innovation channel they could monetize, all in the service of building electric cars. Tesla is an energy company, a battery company, a car company, etc, just as GE or any other innovator ends up in many segments. What they are is a nascent Multi-business, Multi-national company that the market is betting (based on the stock price) is going to be able to be a global force. A lot of publicly traded companies are single-business companies that derive most of their revenues from a domestic operation. The few companies that manage to become multinationals have this outsized influence because they tend to drive massive revenues, earnings, and markets caps. The correlation between operating in multiple business areas and being a massive multinational is a direct relationship, because disruptive businesses always reach a saturation point. Businesses like Tesla that set out to disrupt industries that represent significant portions of GDP will naturally need to move into multiple markets in order to execute their strategies, because they need to disrupt or create a sequence of disruptive or creative strategies in order to reach that saturation point (natural market size). I love Elon for the fact that he thinks of his businesses on a planetary basis, and if you consider the point, you'll see he's actually executing Tesla in multiple markets simultaneously, and essentially going directly from startup to Multinational, and skipping the domination of a single category. He knows that if he doesn't, he's going to face stiff competition from entrenched companies and it's likely he'll lose his advantage. But by tight control of the supply line businesses, and a few strategic relationships with existing multinationals, he's able to elevate Tesla into a multi-business, multi-national organization in record time. Sure, they're a battery company, but what they really are is an organization that's shooting for the moon and actually executing at that scale. Simple incredible to watch.

lugg 12y ago
I simply cannot wait for the biography. I really find this story to be more interesting than any other in similar vein. I really want to know did he start out with this plan or did he simply see batteries as being the easiest thing to improve on by multiples compared to alternatives. Perhaps better said, there are many parts to a car that could be innovated on to such great improvements but the battery in electric cars really needed to be improved by an order of magnitude to make them competitive with petrol power. Was it that fact that drove him to move into the global space using batteries or was moving global going to happen with whatever he needed to do to improve over the competition so much?

deepinsand 12y ago

The article assumes that car batteries will feed into the grid. Tesla seems to think that won't be the case, car batteries need to be secured against harsh outdoor conditions and have tougher charge cycle limits.

jeremyrwelch 12y ago
Tesla deploys a large battery product at all of their Supercharger locations. These batteries are built to withstand harsher weather conditions, and will likely form the basis for a home battery product.

DenisM 12y ago

Musk has previously said in an interview that Li-Ion batteries were at $600 / kwh, but when he looked at the component and manufacturing costs they were at $100 / kwh. Somehow the entire supply chain has piked up a lot of overhead, and he realized it would be possible to reduce that. At those prices, Model-S battery pack costs are between $36k and $51k! When I realized that, I came to conclusion that Tesla Motors could be viewed as merely a stepping stone on the way to building a Gigafactory. When demand for batteries is low, a low-volume battery factory has to share its suppliers with other clients, and those suppliers will price their risks and profits into the deal, multiple times along the chain. On the other hand if you have enough volume to justify having the entire manufacturing cycle under one roof, from ore to ready packages, all those markups go out the window. It wouldn't surprise me to see overhead going from the staggering 500% to a more moderate 50%, but only as long as there is enough demand for all of those batteries. Which is why you need cars - they consume a lot of energy. By now it's pretty much certain that Tesla will be the first to build a Gigafactory. The interesting bit is whether Musk figured out a way to make sure no one has the ability to build a competing Gigafactory and commoditize the business. Right now only Tesla itself can generate enough demand, so they are pretty safe. If Musk can convince the other car manufacturers to buy batteries from Tesla, it will kill the incentive for anyone else to build a competing Gigafactory for a long time. So at the least Musk needs to appear non-threatening to other car manufacturers, and perhaps the best move would be to split battery division away from Tesla Motors completely.

jeremyrwelch 12y ago
Great points here. I think Tesla's move to open source their patents was for these reasons exactly.
faitswulff 12y ago
I'm sorry, but what is a Gigafactory?
- tim333 12y ago
  http://en.wikipedia.org/wiki/Gigafactory http://en.wikipedia.org/wiki/Gigafactory

thrownaway2424 12y ago

I don't get this article. The battery in a Tesla Model S is literally a huge array of Panasonic flashlight batteries. It is an off-the-shelf catalog item you can order from Panasonic. Admittedly, you should probably have prior arrangements before ordering millions. The central insight of the Tesla founders was that people really will pay $85000 for an electric car. The other auto makers didn't believe that.

gsnedders 12y ago
And there's some deal with Panasonic for the Gigafactory as well — it sounds very much like it'll be manufacturing stuff that's basically Panasonic IP to start with.
r00fus 12y ago
You say electric car like it's some souped up Prius (I own a Prius). The Tesla Model-S is an amazing vehicle that's not only electric but amazing to look at and drive. As an aspirational status symbol it's got a hell of a lot of cachet 3 years after it's introduction. That's a feat of product marketing and engineering.
- thrownaway2424 12y ago
  Absolutely an achievement of marketing worthy of the best marketeers in history. But the article is wrong on it's face when it states "the Battery Tech they Developed While Building EVs" because Tesla has not developed any battery technology of any kind, ever.
pdonis 12y ago
> The battery in a Tesla Model S is literally a huge array of Panasonic flashlight batteries. It is an off-the-shelf catalog item you can order from Panasonic. Um, no. Viewing the battery of a Tesla Model S as just a big flashlight battery misses the whole point of what Tesla is doing. A flashlight battery does one thing: it discharges energy until it's empty. Even an ordinary rechargeable household battery only does two things: it recharges, and then it discharges. The battery in a Tesla Model S, OTOH, is continuously computing whether to charge or discharge, how much to charge or discharge, what its current state of charge is, how to manage charging and discharging to maximize its life, etc. And it has to do this in a constantly changing environment--a car that is traveling at varying speeds over varying types of roads. (Doing it for a home battery is actually easier, in a way, because there is less variability in the load.) This sort of technology is absolutely critical if batteries are going to become significant in our energy budget on a large scale. The energy storage medium of the battery is only a tiny piece of the whole picture.

pbreit 12y ago

Article fails to mention that Tesla has actually stated that it intends to market a home battery and that many believe this is the product that Elon referenced recently.

themodelplumber 12y ago

Totally ignorant of the tech here, but could they now do Netflix for Batteries? $9 / mo. gets you all the AA, AAA, D cells you require?

ctdonath 12y ago
It's all about the tech. Not disposable cells on the "one to a dozen" scale, but rechargeables by the cubic meter: wanna drive a car 300 miles? Tesla batteries. Wanna buffer your house power, daytime power demand at nighttime costs, or nighttime power use from solar? Tesla batteries. Anything you'd put gasoline in for high-power untethered use? Tesla batteries. Remember: the first Tesla car was powered by an enormous number of laptop batteries (basically AAs by the hundreds/thousands). Current battery technology insufficient (your phone only lasts a day on a charge, or your electric car only gets 100 miles)? now that he's getting demand up for big-money big-volume batteries, Musk can fund battery research and production on a scale way beyond anything we've seen. Remember: Musk's "gigafactory" project is intended to build more batteries than the entire world currently produces.
anonbanker 12y ago
can I borrow this idea for my startup? how much will I need to pay you?

bs_bishop 12y ago

Interesting to consider --- is there enough lithium in the world to support this stuff? http://large.stanford.edu/courses/2010/ph240/eason2/ http://large.stanford.edu/courses/2010/ph240/eason2/

anon4 12y ago
Can't lithium batteries be recycled?
- peterfirefly 12y ago
  Yes. http://www.teslamotors.com/blog/mythbusters-part-3-recycling-our-non-toxic-battery-packs http://www.teslamotors.com/blog/mythbusters-part-3-recycling... http://www.teslamotors.com/blog/teslas-closed-loop-battery-recycling-program http://www.teslamotors.com/blog/teslas-closed-loop-battery-r...
  - ridgeguy 12y ago
    Thanks for these. The second link notes that the lithium battery recycling is profitable. Do you know of any links to more detailed economics of lithium battery recycling? I'm trying to estimate the cost of Li batteries in a fully recycling system at equilibrium, and I'm not finding any detailed cost/revenue breakdowns. Thank you.
    - peterfirefly 12y ago
      No, sorry. I'd be interested as well.
ams6110 12y ago
Sounds like between using lithium in car batteries as well as for household and industrial energy storage, "peak lithium" might be a real possibility.
deleted 12y ago
[deleted]

leoc 12y ago

Aren't they mainly a subsidy company?

stox 12y ago

And McDonalds is a Real Estate company.

ctdonath 12y ago
I've realized that Pepsi owns Taco Bell just to sell more drinks.
hugodahl 12y ago
Yep, in a very tight race with CBRE for top spot. I wonder if there's a place to find sick information, like the Forbes richest list.

kostyk 12y ago

Elon Musk: Evangelist http://www.thegadflyreview.com/elon-musk-evangelist/#.VRyqe_nF-So http://www.thegadflyreview.com/elon-musk-evangelist/#.VRyqe_...

snowwrestler 12y ago

If true, this puts Tesla and Solar City in complementary positions, and perhaps on track to become the same company under Musk. Solar City tech generates the electricity, and Tesla batteries will store it.

jkestner 12y ago

Don't ignore the other battery companies. http://www.pcworld.com/article/2900452/foxconn-partners-with-chinas-tencent-on-smart-electric-cars.html http://www.pcworld.com/article/2900452/foxconn-partners-with... Foxconn hopes to build cars priced under US$15,000, according to Gou. The contract manufacturer already develops electric car batteries, which he said were in demand. Look out, Tesla. Being that the batteries are the expensive part of an electric car, Foxconn could get to the mass market before Tesla, and possibly set back the market if the experience sucks.

coryl 12y ago
Does Foxconn have much expertise in manufacturing batteries?
- henkboyd 12y ago
  Maybe not as much, but Apple has been "poaching" Tesla's engineers.

zeeshanm 12y ago

Selling batteries def have helped them with keeping the lights on. Not sure if many remember but Tesla was about to go under water at some point before cutting a deal with this German car company to sell them batteries.

chatmasta 12y ago

Also consider: - solar city benefits from increased storage capabilities of batteries. Solar panels (a capital investment) generate higher returns when they also power buildings at night. - National electric grids benefit from increased battery storage because they can store electricity for hours after it's actually generated. - tesla is building a network of superchargers all connected to the electric grid - tesla has arguably more at stake than any company in battery R&D. Few if any companies are as motivated as tesla for battery tech to improve. My hypothesis is that Elon Musk is architecting Tesla as the "cloud" of electricity generation, storage, and transfer. He is building the ultimate smart grid. Electric cars are a nice excuse to develop the requisite network effects and initial momentum before expanding to other verticals. He's going from a red ocean to a blue ocean. [1] http://en.m.wikipedia.org/wiki/Blue_Ocean_Strategy http://en.m.wikipedia.org/wiki/Blue_Ocean_Strategy

saryant 12y ago
How on earth can a strategy centered around generating, storing and transmitting electricity be considered blue-ocean?
- sparkman55 12y ago
  Well, the innovation is really about storing electricity. We've been generating and transmitting electricity for over a century now. Once we can store electricity (in batteries, for example), then intermittent power sources, like solar panels (and also wind turbines) become much more valuable. Energy storage is a very inconsequential market right now, but if smart-grid-connected Teslas really take off, then they become important not only to the automotive industry, but also the electricity and energy industries.
  - lotsofmangos 12y ago
    Once solar cells hit a tipping point, storage becomes one of the best businesses to be in.

fivedogit 12y ago

Wrong. Tesla is a distribution company. Cars and batteries are commodities, more or less. Corporations are now extremely efficient at copying and commoditizing their competitors' innovations - just look at how fast the android ecosystem popped up alongside iPhone - so technological advancements are not the real source of long term value but merely the temporary advantage needed to be first to a market and set up network effects. EBay, for instance, was there at the right time to take recent technology advancements, set up a network-effect marketplace and milk it for, oh, 2 decades. They stopped being a technology company a long time ago. So how does this relate to Tesla? Answer: The supercharging stations. If Tesla owns the most charging stations then EV buyers have a good reason to buy Tesla over a hypothetical Ford or Toyota EV, putting Tesla at a major advantage. Eventually it'll be on Ford and Toyota to bet the farm on a massive supercharger network of their own and launch an EV to compete against Tesla's entrenched domination of the marketplace. Right now, Tesla is in a fleeting moment of technological and branding advantage which they are correctly leveraging to quickly set up their charging network. It's a lot like telcos bragging about their coverage networks. Eventually all the (surviving) car companies will be doing something similar, running TV ads about their charging station maps. Companies are either A) marketing companies or B) distribution companies or a blend of both. Nike is a marketing company that happens to sell shoes. Ditto Taco Bell and cheap Mexican food. Amazon, Akamai, Google and Facebook are distribution companies --- they own the network or marketplace. Disney (mostly distribution), American Airlines (mostly distributiom) Walmart (mostly distribution) and Apple (mostly marketing/branding, but appstore and itunes are distribution powerhouses) are a little of both. Edit: Nielsen, Google are distribution comapnies. They have prohibitively large or complicated information ingestion systems set up to and then resell the results. Newspapers and TV are too, but their distribution monopolies are crumbling. Interesting. That means solar advancements are very bad for Tesla. If people don't need to stop and charge, then the distribution network is worthless.

jeremyrwelch 12y ago
I generally agree with your categorization, but I would be more specific that Tesla is both a Battery distribution AND marketing company. EVs existed prior to Tesla, but they were the first company to identify and correctly serve the high end market with the Roadster. My company Chrg specializes in charging infrastructure. Note that the Superchargers you mentioned actually use specially designed Tesla batteries, which are precursors to the Home battery product Tesla will likely be launching soon. Solar advancements are a great thing for Tesla. Once power is captured via solar panels, it will need to be stored – preferably in Tesla batteries.

otar 12y ago

And Google is a search engine...

jeremyrwelch 12y ago
Google is an advertising company with a monopoly on a specific native ad type called "search ads"

apendleton 12y ago

I'm sort of curious how the economics of this will end up working out from a consumer's perspective. Lithium ion's big advantage was energy density -- you can store a lot of juice for not much mass or volume, which is a really big deal for portable electronics or cars... for a stationary home installation, though, much less so. Having a giant thing sitting in your backyard might be okay if it was high-capacity and cheap, and it seems like there might be other contenders besides Li-ion that might do well given the different set of operating constraints that stationary storage would have. Maybe other battery chemistries, or maybe kinetic energy storage devices like evacuated flywheels, compressed air, etc....

TeMPOraL 12y ago
> Having a giant thing sitting in your backyard might be okay if it was high-capacity and cheap There are also walls you could embed batteries in. A house has a lot of surface area that could be used to store energy.
- stcredzero 12y ago
  Embedding Li-ions in your walls -- it's safer than embedding gasoline tanks in your walls. It's still far from a good idea, though.
Brakenshire 12y ago
Energy density is still important for home installations, especially if you have ambitions of retro fitting on a wide scale. If you could get to a situation where solar + battery was cheaper than a grid connection, a majority of the population will still not buy it if it's something which will require a half tonne object to be installed on a specially constructed concrete plinth, brought on a lorry with a crane system, and taking up 2m x 1m of space. Far, far better if it can be within the size and weight range of a normal white box utility, for instance the kind of freezer that people put in their garage.
- HeyLaughingBoy 12y ago
  In the rural or suburban US, it is very common for homes to have large propane tanks for heating and cooking, due to them being too far away from supply lines for natural gas. The tank is typically much larger than your example. Not to mention essentially all new homes have central A/C with one of the heat exchangers "installed on a specially constructed concrete plinth." We have plenty of space; it's simply not an issue.

_nedR 12y ago

>In the NY Metro area, it’s Con Edison That is a rather unfortunate (or rather appropriate) name for a company named after Edison.

peterfirefly 12y ago
Especially in French.

Animats 12y ago

Tesla is not a battery company until they actually start manufacturing batteries.

richardw 12y ago

I can't see Musk trying to build a battery company as his primary focus. That's not exactly a world-changing life goal (well, for him. I'd be happy with that). That's like saying that Apple is a chip company because their chips are central to efficiency. The battery might currently be the most important single component of an EV, but there is no guarantee that will be true in five/ten/twenty years. The car is more than just a mechanism to increase scale. You don't beat Musk by making a better battery company. You'd better find a way to beat this: http://www.businessinsider.com/the-tesla-model-s-is-consumer-reports-top-pick--for-the-second-year-in-a-row-2015-2 http://www.businessinsider.com/the-tesla-model-s-is-consumer... (The word 'battery' is not even mentioned in the article. Tesla could have less battery life but still win.) Again, similar to Apple, Tesla found a point of advantage and will own it. The landscape will change and so will Tesla's efforts at building or maintaining an advantage against some very powerful companies.

weavie 12y ago
Batteries may appear quite humble, but they are at the core of just about every technological advancement we have at the minute. Cars, laptops, phones, wearable devices.. they all depend on batteries. At the minute battery life is a real bottleneck for us. We are turning into a nation that plans their life around moving from charging station to charging station. Batteries are heavy and they don't last that long. The next truly world changing advancement is going to have to involve making access to energy much less heavy.
danmaz74 12y ago
I have no idea if batteries are Musk's primary focus here, but creating very cheap and dense storage for electricity WOULD be as world-changing as you can get: if you solve that problem, you can't just replace combustion engines in cars, you can also use solar and wind power for base load on the grid. This would be much more world-changing than cheap rockets.
dagw 12y ago
That's not exactly a world-changing life goal An order of magnitude or two improvement of current battery technology will fundamentally change the world in ways we can hardly imagine. A cool electric car is nothing in comparison.

joshfraser 12y ago

They're also a software company. I was recently shocked to hear that ~60% of Tesla employees are involved in software engineering, versus a normal car company at around 2%. Source: http://www.businessinsider.com/morgan-stanley-tesla-multiply-stock-worlds-most-important-car-company-2015-3 http://www.businessinsider.com/morgan-stanley-tesla-multiply...

stevewilhelm 12y ago

> Tesla is a Battery Company Too narrow. Tesla is a electrical energy storage and distribution company. Tesla has over 400 Supercharger stations. I think this quote sums it up: “I see us more as an energy innovation company, at our core, than even as a car company.”

astrocat 12y ago

Batteries are to devices what rockets are to space...things. So there's a trend here.

ck2 12y ago

Except we need an exponential leap in battery technology. These 1% per year improvements are going to take forever to get us better EVs

eru 12y ago
But 1% a year IS exponential.

yogurt 12y ago

Tesla is no more a battery company than Amazon is a shipping company.

kdawn 12y ago
Every company needs a platform to attack other markets and industries from. Build fast and break into other accessible applications of your product or service.

yogurt 12y ago

Tesla is no more a battery company than Amazon is a shipping company.

kamikrazy 12y ago

Having a "Tesla battery pack" at your home is more than just handling grid fluctuations. What if the battery pack can act as a supercharger for your car? It's like having a tank of gas in your garage all the time.

hnnewguy 12y ago
>It's like having a tank of gas in your garage all the time. And how many people care to have a tank of gas in their garage all the time, even though the idea is completely feasible today?

efremjw 12y ago

Whose battery IP does Tesla use?

SEJeff 12y ago
Panasonic, source: http://www.teslamotors.com/blog/panasonic-and-tesla-sign-agreement-gigafactory http://www.teslamotors.com/blog/panasonic-and-tesla-sign-agr... http://en.wikipedia.org/wiki/Tesla_Model_S#Battery http://en.wikipedia.org/wiki/Tesla_Model_S#Battery

jagtesh 12y ago

Just like how Apple is a chip fabrication company? I don't think so. Tesla was the first company to introduce OTA updates, something unheard of in the car industry. So to call them a battery company sounds very patronizing to me.

drzaiusapelord 12y ago
Except Apple is successful and Tesla is not. When articles like these come out for a company bleeding money its something to worry about. I think its obvious the lithium-ion just doesn't have the lifespan and density to replace cars. At least when gas is under $6 a gallon. After 4-5 years the resale value of that $30k battery pack is non-existant as its begining to fail. We're seeing this a lot with hybrid sales where the car's battery pack has a fraction of its capacity. The makes the motor work harder, but with a pure EV car there is no gas motor to take up the slack. I have very low hopes for EVs. Even if Tesla lowered battery prices by 20%, which would be impressive, they're still extremely expensive and still wear out quickly. They make sense when gas is crazy expensive, but its not, especially with all this investment in shale oil. I imagine the future will have more efficient hybrids and perhaps Tesla will migrate to a hybrid company if they want to stay alive. 100k for a range anxiety inducing EV with a low resale value after x years due to its $50k battery pack wearing out is not the vision of the future here.
- jagtesh 12y ago
  Do they have to be profitable? Yes. Will they move to manufacturing hybrids? Probably. But they're definitely not a battery company. At least not yet.

felixbraun 12y ago

Tesla's goal is to accelerate the advent of sustainable transport. They want (a) to see as many electric cars on the road as fast as possible and (b) make a lot of money. B is required to perfect the product -- which serves A better than anything else. I think the 'Apple way' is most efficient: selling the whole package and making it so good, that people happily pay a lot.

e12e 12y ago
I'm not sure how cars will ever constitute "sustainable transport". Less unsustainable than carbon fuelled cars, maybe. And that's a big maybe, given batteries, power generation etc. But I suppose there's not that much money in trying to sell bicycles...