Depart it to Elon Musk to show battery chemistry right into a viral phenomenon.
Musk teased a forthcoming “Battery Day” throughout Tesla’s second quarter earnings name. He famous that “cell manufacturing at an reasonably priced worth” is the important thing limitation on Tesla’s progress. However that was about it for particulars on what the day would truly embrace. The web went to work theorizing the large reveal.
Now the present is nearly upon us (it goes reside Tuesday at 1:30 p.m. Pacific, in idea), and there’s not rather more when it comes to arduous details to go on. However we at GTM have been following the battery marketplace for years, and are veteran observers of Tesla saying issues.
Generally the much-hyped bulletins develop into overblown. The unique Photo voltaic Roof launch, as an illustration, made it appear to be that product existed again within the fall of 2016. Years later, Tesla hosted a second launch to declare that Photo voltaic Roof was actually prepared for prime-time, finally. Historical past reveals that a Tesla announcement doesn’t irrefutably confer a significant shift out there.
However as a result of Musk has constructed up expectations for battery day, it is turn out to be an occasion even earlier than it occurred. Wall Avenue analysts are making predictions about what will probably be revealed. Shareholders are sweating to seek out out if the information sends the inventory even larger. A boring or overly technical reveal might disappoint the market, which is dicey, as a result of significant battery science typically seems boring and technical to the untrained eye.
Right here’s a shortlist of inquiries to ask going into the occasion, to separate stardust from strategic gamechangers.
1. Will this considerably change Tesla’s battery prices?
Tesla might toggle a spread of inputs — battery chemistry, format, manufacturing course of — however finally all of it comes all the way down to value. Can Tesla use its engineering would possibly and industrial design expertise to meaningfully shave the associated fee off the batteries that type the essential value middle of the electrical automobiles (and grid storage enterprise)?
Like a bicycle owner breaking away from the pack within the Tour de France, Tesla is de facto simply racing itself at this level. Its batteries are effectively out in entrance of its friends on value for efficiency. Nevertheless it has not but cracked the long-held aim of manufacturing a really mass-market, reasonably priced electrical automobile.
On the stationary storage facet, Tesla way back lapped the competitors and compelled different firms to decrease their costs. However, once more, batteries are removed from mass-consumption for power storage within the residence or on the grid. A breakthrough on battery prices might speed up the adoption curve for grid storage, too. The lasting affect of Battery Day will probably be measured in opposition to this core metric.
2. Is Tesla’s manufacturing technique going to shift?
For years, Tesla “batteries” truly contained cells made by Panasonic, packaged in know-how designed by Tesla. Not too long ago, the carmaker has labored with LG Chem and CATL, too.
Among the extra intriguing Battery Day hypothesis facilities on whether or not Tesla will start manufacturing cells itself.
One doesn’t merely turn out to be a top-tier battery producer in a single day. It’s a sport of scale, so newcomers must make investments billions of to meet up with incumbents’ manufacturing capability. They’d additionally want in-house chemistry and battery engineering experience to distinguish themselves.
However Tesla has already invested billions in its Gigafactories — and has years of expertise working with completely different battery chemistries and pushing them to most efficiency. It wouldn’t have to start out from scratch.
Partnering with established producers made sense when Tesla nonetheless had to determine methods to mass-produce electrical automobiles and show that individuals would truly purchase them. These elements are not unsure. If the margins Tesla pays to purchase cells from its companions stand in the way in which of additional value reductions, now often is the time to take it in-house.
However Tesla would not plan to chop these suppliers out of the deal, Musk posted on Twitter Monday afternoon.
“We intend to extend, not scale back battery cell purchases from Panasonic, LG & CATL (probably different companions too),” he wrote. “Nevertheless, even with our cell suppliers going at most velocity, we nonetheless foresee vital shortages in 2022 & past until we additionally take motion ourselves.”
As different automakers ramp up their volumes of electrical car manufacturing, the self-determination that comes from scaling your personal cell provide in-house will turn out to be more and more beneficial.
three. How quickly will the change occur?
Modifications within the back-end provide chain can take some time to ripple out to buyer wallets. A key query for Battery Day is, when will it have an effect on the costs of automobiles and battery storage?
Tesla has proven a willingness to unilaterally change its costs seemingly out of the blue. It dropped car costs by a number of thousand earlier this yr. In years previous, it quietly raised the value of the Powerwall, regardless of the basic logic that batteries ought to get cheaper over time.
The immediacy of any worth adjustments will decide whether or not this occasion stays buzzy past the Tesla-obsessed. A sudden low cost makes it a much bigger story for customers as an entire.
However Musk tamped down on expectations for an instantaneous payoff on Twitter Monday.
“This impacts long-term manufacturing, particularly Semi, Cybertruck & Roadster, however what we announce won’t attain critical high-volume manufacturing till 2022,” he stated.
That appears to negate the possibility that Battery Day adjustments issues for many customers within the near-term.
four. Will there be surprises?
The current tweets counsel Tesla will step into cell manufacturing, however that it will not take impact for a number of years. That alone is unlikely to validate the expectations that followers and analysts have positioned on Battery Day. To fulfill the second, Musk might throw in some goodies to provide of us one thing to chatter about past the procedural updates on battery provide chains.
This might be a brand new car unveiling, souped up charging speeds, or one thing else solely. The problem is, may even Musk make batteries compelling sufficient to justify all the thrill? Or will there should be some flashy, not-especially-battery-centric reveals to maintain issues thrilling?