Analysts from UBS teamed up with engineers to figure out which electric vehicle batteries made by established manufacturers offer the best value. They concluded that cells made by Panasonic in Tesla’s Gigafactory are 20 per cent more cost efficient than the next best on offer from LG Chem.
The research by UBS’s evidence lab included batteries from Panasonic/Tesla, LG Chem, Samsung SDI and Contemporary Amperex Technology (CATL). The results showed Tesla’s batteries cost $111 per kilowatt-hour of charge, which are $37/kWh cheaper than the next best from LG Chem.
This obviously puts Tesla ahead of the market and gives them the edge of profitability the EV maker had last claimed in its Q3 earnings (we reported).
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This is also the view the UBS analysts take, who write in the report that “contrary to our team’s previous view, they now believe incumbent OEMs will be less profitable than Tesla in EV space. Tesla’s cost advantage can be defended (at least temporarily) because other OEMs will not switch to cheaper NCA chemistry. We continue to believe that TSLA remains ahead of the pack when it comes to EV tech.”
In the report UBS then expects the four battery manufacturers to control 70 per cent of the market by 2025, and for costs to fall by about 10 per cent over the next two to three years.
Also Tesla aims to build on their advantage and to increase their production capacities for both batteries and electric cars over the coming years and they are ready to spend billions. Reads the most recent 10-Q filing:
“Considering the pipeline of new products planned at this point, and consistent with our current strategy of using a partner to manufacture cells, as well as considering all other infrastructure growth and expansion of Gigafactories 1, 2 and 3, we currently estimate that capital expenditures will be between $2.5 to $3.0 billion annually for the next two fiscal years.”
Even prior to that, Tesla aims to be at the magic battery cell price of $100 per kWh by the end of the year reportedly.