For Tesla, Nissan And The World, The Trillion-Dollar Battery Breakthrough Remains Elusive

May 18 2014, 8:21am CDT | by

Elon Musk, Tesla’s big-thinking CEO, sees the future better than most. Whether he’s talking about  sending humans to Mars or building a $5 billion battery factory for his electric-vehicle maker, Musk’s plans tend toward the grandiose and yet his track record suggests its risky to bet against him. When he spoke last week at the World Energy Innovation Forum at Tesla’s headquarters, he suggested the world would need “hundreds” of those Gigafactories for producing batteries going forward — not all of which would be build by Tesla, of course. While it’s likely some expertise will bring down the cost of future factories, Musk’s pronouncement was both a bit daunting and depressing. First, it means at least a trillion dollars of investment in battery plants over the coming decades. Second, it implied at least indirectly that those batteries won’t be a lot better than the ones Tesla uses today.

Math a la Musk

Tesla’s first Gigactory is slated to go online in 2017 with a capacity of 50 gigawatt hours worth of batteries annually. Tesla itself plans on using most of those batteries to supply up to 500,000 vehicles, most of which will be the company’s third-generation sedan, which is expected to start at $35,000. The remainder of the production will go into the nascent market for renewable energy storage, mostly for solar power.

While that market is expected to start small, the exponential growth of small-scale solar, in residential and small business systems suggests the market for storage could boom. And, in fact, I recently ran into a Tesla employee who has been with the company for several years. Speaking on background, he suggested many at the company believe the market for energy storage could eventually be larger than the auto market for Tesla. Still, it’s worth noting that most residential systems would require a battery pack only a fraction the size of one in Tesla’s Model S. So when thinking of that storage market, it’s sensible to think out very long term.

What then of those automobiles? While predictions of the number of cars sold 10-20 years from now are fraught, due to a huge uncertainty over the growth of carsharing, mass-transit, and the middle class in the developing world, the order-of-magnitude estimate puts it above 100 million. Using the first Tesla Gigafactory as an example, it would take 200 of them to build 100 million electric vehicles with Tesla-like range 20 years from now if those batteries get no better. But read that sentence carefully. It contains two critical assumptions that are unlikely to hold. Nissan’s Leaf, with a range that’s less than 1/3 the high-end Tesla Model S and a price that’s an even smaller fraction, has become the world’s best-selling purely electric car ever, reaching the 100,000 sold mark in January.

Less and more

Nissan’s battery is currently 24 killowatt hours, a fraction of the 60 and 85 kWh packs Tesla offers. That explains the smaller range, but also helps Nissan offer the car for significantly less money. (Tesla and Nissan are also targeting different spots on the luxury-utility curve, of course.) Going forward, Nissan has more than hinted it will expand battery capacity. At the recent Beijing Motor Show, Nissan’s Andy Palmer went so far as to say that the Leaf will need a 300 kilometer range down the road (about 180 miles). That’s a bit more than double what’s realistic today with the car, but would still require a smaller battery pack than any Model S currently on the road. In fact, it would seem to require the same size pack Musk suggested would come in the base version of the third-generation Tesla, which he described as 20 percent smaller than the one in the Model S (though still offering 200 miles of range).

The significance of all this math is to point out that it ought not take as many batteries as a straight multiplication would indicate to produce 200 times as many cars even if every car in the world were purely electric. What Musk didn’t say, but should be clear to skeptics especially is that the chance of an all-electric automobile fleet is close to nil unless something else happens along the way: Electric cars need to become cheaper than gasoline-powered cars while offering range and recharging sufficient to satisfy nearly everyone, everywhere. If a breakthrough in battery capacity were to occur such that one could offer a 300-mile electric car for less than $30,000 — and that car could be recharged in most parking lots, on many city streets, and with a Tesla-like Supercharger network accessible to it on all the highways — perhaps the days of gasoline would be numbered after all.

Of course, such a battery would almost certainly carry more power in the same space as today’s. And therefore, you’d need a lot fewer of them to power the world’s cars. Say, for example, you could improve the energy density of this hypothetical device fourfold over today’s lithium-ion batteries. That would allow you to build a battery pack for a high end Tesla that weighed just 300 pounds instead of the roughly 1200 in the current vehicle. The company could then offer an option for a 500-mile model (using two of these packs) that still was 600 pounds lighter than today’s top-of-the-line model. And presumably, the world would need just 1/4 as many battery factories — ideally paying only 25 cents on the dollar for storage capacity to boot.

Instead, we get progress and possibility

Musk has talked up the capabilities of the Gigafactory on the cost front, suggesting that Tesla’s battery costs will fall by at least 30% over current levels. A fascinating analysis of just what those costs are was done last year at Green Car Reports. While Tesla never confirmed the numbers, Musk did hang up on a Barron’s reporter who doubted the company would achieve its cost-reduction targets on batteries and at the same time mentioned a target price for the Model S battery of $10,000-12,000. It’s likely that today the company isn’t more than $5,000 from that goal.

And to get there, it has no special plans to do anything exotic. Instead, it’s using old-school techniques like managing its supply chain better and lowering logistics costs. Musk talked of working directly with raw materials suppliers on Tesla’s recent earnings call, saying they were surprised to hear from the company and pleased to explore ways to lower costs on metals like nickel. In addition, the Gigafactory is designed to be a soup-to-nuts operation where on-site renewable power will drive an integrated manufacturing facility that will produce everything from battery cells to finished packs, minimizing transportation expenses.

What Musk didn’t mention was any plans — at least at this time — to tinker with the insides of the battery, the chemistry itself. In fact, it’s likely that other than small gains that come from refinements in manufacturing, the batteries in a 2017 Tesla will be functionally akin to those in today’s cars.

Breakthoughs anyone?

Elsewhere, some are looking for breakthroughs, though everything has its own limitations. Power Japan Plus, a startup out of Japan, is ready to go commercial with a unique design based purely on carbon. By obviating the need for metals like nickel and cobalt, their so-called Ryden battery has the promise of a lower manufacturing cost.

It also promises a number of other intriguing advantages. Unlike lithium-ion, the “dual carbon” design can last thousands of cycles without losing any capacity — allowing perhaps a 20-year battery life vs. 8-10 in today’s EVs. Some Leaf owners in Arizona have already experienced capacity loss, blamed on the desert heat. And the Power Japan Plus battery requires less complex cooling than lithium designs because it barely gets warm during recharging or use. In a design like Tesla’s, where thousands of small battery cells are packed together, the Ryden battery — named after the Shinto god of lightning — might even allow a somewhat denser battery pack. But only slightly so./>/>

The problem is that while this promising technology offers important benefits in safety (it can’t catch fire like lithium ion) and charging speed (it can take more current, more quickly), it doesn’t offer a density advantage. The team from Power Japan Plus was forthcoming about this while touting the advantages of their technology in those other dimensions. But whether or not that will be enough to get automakers interested in an untested design is another matter.

And part of the challenge has been that nearly all breakthroughs so far have proved to be difficult to bring from the lab to mass production. One promising idea has been something called lithium-sulfur batteries, which theoretically can offer a battery with at least twice the energy density of today’s best lithium-ion designs. It’s possible that over time, a lithium-sulfur design could even deliver that 300 pound Tesla battery discussed above. If, that is, anyone ever shows one can be built. One company trying is PolyPlus, a Berkeley, Calif. company who has been working on the technology for several years. But to give you a sense of the challenge, they don’t expect a commercial battery before 2016.

The path from there to an electric vehicle would then be several more years at minimum, making it something we might see in the next decade at the soonest. In other words, lithium-sulfur might be ready in time for Tesla’s second Gigafactory — or perhaps Nissan’s first sometime down the road.

No Moore’s Law

There has been slow, steady progress in batteries over the years, but the general consensus is that the lithium-ion battery is going to hit a wall in the not-too-distant future. At that point, the ability to store more power will stop improving and soon after, the ability to drive down costs will similarly grind to a halt. The good news is that even today, battery costs are not the primary impediment to the growth of electric vehicles and Tesla has proved a long-range vehicle can be built using existing technology. The bad news is that if EVs are to move from their current trajectory to the rapid mainstream more rapidly than currently forecast, it will take a breakthrough beyond the 30% cost reduction Tesla envisions to get there. At the moment, that breakthrough is little more than a maybe.

Follow me on Twitter. Find the rest of my Forbes posts here.

 
 

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