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Tesla's giant battery saved $40M during its first year, report says (electrek.co)
781 points by touristtam on Dec 6, 2018 | hide | past | web | favorite | 323 comments

This is going to become more and more common. Li-ion battery costs are falling at a constant ~15% per year and there is no real reason why this shouldn't continue. Similar to what Moore's law did to semiconductors, this will mean that batteries are poised to have a massive impact and eat any energy application that can't keep up. New tech will have a hard time to keep up simply due to momentum this has already developed, aka it will have to be at least a magnitude better AND keep on scaling.

This is why Tesla is valued higher than GM, Daimler or pretty much any other car company. Tesla at it's heart is a battery company with products built around that. From what I've read, from 2025 onwards traditional internal combustion engines will not be able to compete on price with electric cars.

Something similar will likely happen to energy storage, though this is of course still a relatively novel industry that has been spurred on by renewable energy's intermittent availability. Interesting times..

Edit: percentage of annual battery price drop after doing some googling

> This is why Tesla is valued higher than GM, Daimler or pretty much any other car company. Tesla at it's heart is a battery company with products built around that.

It was Samsung, not Tesla, who supplied the actual cells [1]: Tesla’s giant new Powerpack project in Australia will use battery cells made by Samsung

[1] https://electrek.co/2017/08/09/tesla-powerpack-project-austr...

And in Tesla's Gigafactory 1, it's Panasonic who make the batteries. https://wikipedia.org/wiki/Gigafactory_1

Someone else owning your key competitive advantage sounds like a vulnerability...

OTOH you could similarly say the touchscreen was the key to the first iphone... invented, developed, manufactured and owned by someone else.

I believe it (the Tesla battery plant) was built as a joint venture with Panasonic giving the IP and tooling and Tesla operating the plant. They're using a custom cell format also, away from the ubiquitous and standard 18650.

LG, Panasonic and Samsung make almost all the lithium ion cells used today so it doesn't seem odd that Tesla would license one of their technologies to start. The r&d savings would be in the billions.

The 2170 (or 21700) batteries used in the Model 3 were not invented for the Model 3 originally. AFAIK, they predate the development of that vehicle.

They might not have invented the format, but they are fairly certainly using chemistry optimized for their cars.

Not sure whether Panasonic does it for them but the way I hear them talk about it they seem to have quite a bit of R&D in house.

> Someone else owning your key competitive advantage sounds like a vulnerability...

Musk has repeatedly mentioned how aware of this he is. That explains his insistence on building the Gigafactory.

interesting! [citation requested]

I haven’t been able to find a clear quote in print, but a year-old article in Vox [1] reads:

> “Musk has been the visionary,” said Steve LeVine, a journalist at Axios who has written a book about the battery industry. “He has been willing to take the plunge all the way along, from the very beginning.” In contrast, he told me in a phone interview, “Detroit has approached this race so cautiously.”

I remember hearing Musk being quite adamant the scale of the factory was for batteries, but you have to understand, he can’t really publicly say that he’s leveraging Panasonic for now, but will drop them as soon as he can.

[1]: https://www.vox.com/new-money/2017/4/17/15293892/tesla-batte...

Everything that he has been saying lately implies that they won't drop them. They may add other suppliers (especially for the factory in China), but they will likely always rely on suppliers for the cells themselves. I can't really think of a good reason for this to change.

After all, they are by far the world's largest consumer of batteries. They have leverage.

The touchscreen was done elsewhere, by someone else. Seriously, it was presented as a product to several phone companies and did not draw them in. The key to the first IPhone was the interface and form factor.

Ballmer was famously quoted in an interview laughing at it claiming it wouldn't appeal to customers due to not having a keyboard.

Hell, back in the 40's even Thomas Watson of IBM claimed there was only enough market for 5 computers in the world.

Many times it is a different style of how standard business operates so someone coming in and changing the market is really hard to look at when your mind is already made up.

Batteries are systems, not just cells.

Do you know how long these cells can last in such a scenario ?

Tesla provides a 10 year warranty for their stationary energy storage systems. I have seen a bunch of articles claiming that Tesla projects a ~15 year lifespan but have yet to find any actual statement from Tesla. Ultimately lithium ion lifespan is hugely dependent on temperature, depth of discharge, and number of charge cycles so there is potentially a lot of variance depending on use case and local climate.

It depends on many variables, namely depth of discharge, cycle count, speed of discharge and the same for charge.

If you bring your lipo cell from 80 to 60% and back slowly you can get an order of magnitude more cycles. This lends itself well to solar storage scenarios where you want to level out the production and can plan around how and when it will charge and discharge.

Did I read right that a $66m investment netted $40m this year?

With my limited understanding of the Australian energy market, the system 'saved' $40M across the Australian energy market, it didn't generate $40M in income for the system operators.

ie by being a fast peaker supply, it stopped spikes in energy prices across the Aust Energy market which is where the savings of $40M come from.

If you consider Australia as a whole, did it save anything? That is, did it simply save the Australian state of South Australia $40 million they would have spent on the spot market, but entirely at the expense of other entities in the Australian market that would have otherwise sold it the electricity?

Not that there is anything wrong with that - it still makes total sense for SA to deploy such a system in that case, but it's very different than say saving $40 million in fuel costs due to not spinning up short-term natgas generators or something.

Short version: the Australian energy market is a mess and was being gamed by a small (2 or 3) number of operators of gas peaking plants who were driving the spot price up to several orders of magnitude higher than normal wholesale prices. The battery by simply existing cut the ability of these operators to game the market as heavily, because they could only bid up to the floor price the state government had set for the battery to bid in at.

This is direct state interference in a competitive market so the “floor” is still quite high. With more private operators entering the market the ability to game the system will be eroded further since everyone wants to get the easy money.

The savings were mostly due to cutting the fat out of the market gouging practices. No/little change to actual supply occurred.

Your point is valid, the 40M would have went elsewhere in the market. I still think it's arguably better to not be wasting fuel and contributing pollution, and that preventing the disproportionate flow of money from utility consumers to operators is a side benefit... but that's debatable and a very socialist opinion.

There's nothing socialist about squeezing inefficiencies out of a market. It's what well functioning markets are for, after all. From what I understand the Australian energy market is a long way from well functioning, with a few small players holding the system to ransom.

Socialism would be hitting those guys with a big regulatory stick, or shutting them down for just providing a service. Not all state expenditure is socialist. Were monarchies involving heavy state domination of the economy socialist? No, and neither necessarily are liberal democracies with a state sector, especially if that state sector is exposed to market forces.

It's really annoying that so many mentions of socialism or capitalism on HN get the basics wrong. These terms have perfectly good established meanings that are actually quite specific.

The only inefficiency is that they're burning a consumable to provide the electricity during peak. The rest (likely a good part of the that 40M) is going back into the economy in one way or another (construction of the peaking plants, operators margins, jobs, suppliers of consumables, taxes on consumables, taxes on profits, etc) - provided that those funds don't leave the country it should be very near to a net neutral cash flow for the local economy, only that the battery keeps more in the consumers pockets vs the utilities', hence my socialist comment - moving money from corporations to consumers. If you consider that the energy for the battery ultimately comes from the same grid, and that grid is not entirely renewable, then it's power in all probability also consumed some fuels (70% of Australia's power comes from coal I think).

So: Australia is sunny and it's consumption peaks generally follow the temperature due to air conditioning - so build more solar and pair it with more storage (batteries) instead of investing in coal and gas burning.

> hence my socialist comment - moving money from corporations to consumers.

Thats is such a bizarre comment. No corporation has a right to make money, they have to earn it by providing a valuable service. If that service can be provided more efficiently another way, tough. That's what market forces are all about.

Yes the energy company commissioning the battery is publicly owned. You could squint and see some socialism in that. I've no argument there. However it's doing this because it is exposed to market forces, and overspending on peak power provision. Characterising responding to that market stimulus with capital investment is I think going a step too far.

Look at it another way. Is exposing public companies to market forces and having them react to those stimuli more socialist than protecting them from markets, or less socialist? Is it closer to pure capitalism or further away?

How is wanting to save your citizens money debatable?

South Australia's energy grid is a very exceptional case, due to a very jarring transition to renewables. I would not expect the same level of returns in other areas.

None of the problems in the SA grid have been due to renewables.

The problems have been interconnects failing, poorly maintained transmission lines failing, the market operator placing restrictions on renewables which meant that renewables were not allowed to try to keep the lights on, and reliance of SA on electricity imported from unreliable interstate supply (aka coal thermal plants that break down or simply fail due to high ambient temperatures).

All of SA’s energy problems are due to poor regulation, poor market operation, poor maintenance, Federal interference, market gaming by fossil fuel operators, and unreliable coal plants.

There will be similar returns possible for other batteries in NSW (a net importer, thus highly vulnerable to gaming of the market) and QLD with a large installed base of unreliable coal which means increasing need for ancillary services.

Coal is not reliable to start with, and the plant currently in use is old and getting to the point of being no longer economically viable. NSW and QLD grids will need significant support services as they transition from unreliable coal to dependable (but intermittent) renewables.

It's worth noting that the major recent failures of the grid across south-eastern Australia have been due to 1) tornados taking down the interconnector between Victoria and SA (a failure which the conservative government blamed on renewables), and 2) regular failures from the decrepit old coal power plants.

While the transition to renewables has indeed been rapid and jarring, that's not what has caused problems.

The renewables were definitely a factor in the SA blackout.


Failure of a meshed power system cannot be attributed to the failure of any single sub-system. Rather it must be a combination of factors including those you just mentioned.

The dependence of the power system on renewables (specifically wind farms)contributed in two ways to the blackout:

1. The majority of wind turbines provide little or no system inertia. By displacing synchronous generation with wind generation, system inertia is reduced which results in greater ROCOF during an event where there is a change in active power demand/supply. In the SA blackout, fast ROCOF overwhelmed the system's last line of defence- under frequency load shedding.

2. Some wind turbines contained a fault ride-through setting which AEMO was apparently not aware of prior to the blackout. Specifically, the setting caused the turbines to disconnect after experiencing a sequence of voltage excursions within a set time period. The disconnection caused a loss of active power supply to the grid which contributed to the drop in frequency and eventual collapse.

I think bmon just meant that renewables have more daily peaks than coal or nuclear, so they create more opportunities for battery savings relative to traditional fast start generation.

More peaks doesn't mean worse all things considered, it isn't a critique, it's just saying that battery viability is highly contingent on local power mix.

I don't have any specific wear numbers, but a system like this is going to be designed for maximum lifespan not for limited cases where you want every possible drop of energy that can be put into or out of the battery. I suspect that the cells are never charged above about 75-80% of capacity and probably are never discharged below 20-30% of capacity. Avoiding both extremes should greatly extend the number of available cycles from hundreds to thousands or more.

”but a system like this is going to be designed for maximum lifespan”

I don’t know what this system was designed for, but a product that costs $66M and saves $40M in its first year need not be designed for a long lifespan.

It seems scrapping this after 3 years still would net you a nice profit margin.

So, depending on how much designing for a long lifespan costs, that may be a thing of the past.

> It seems scrapping this after 3 years still would net you a nice profit margin.

110% eco.

AFAIK these things can be recycled with relative ease. I wonder at which point it would make sense to include a small battery recycling plant with large installations like this. "Cell XYZ is damaged, remove, replace and recycle"

But even 1000 cycles... assuming 0.5 cycles per day gives you ~6 years life span? Sounds a little too low.

3000 cycles “lifespan” but most of the degradation happens in the first couple of years with the rate of degradation about 3% a year, capacity still remains and the product will still have significant capacity in 20 years.

As opposed to say a synchronous converter which requires annual downtime and continual replacement of parts, and (being limited by inertia) can’t provide the same stability and support that a battery can.

The payback period is ~18 months so lasting less than 10 years is mostly irrelevant.

On top of that these systems are still useful well below their original capacity, so they can rather than a sudden huge bill you simply add more capacity as the original battery’s degrade in a fairly predictable fashion. Over time you end up with a much smaller annual investment than your saving every year.

payback is not the goal though, it's about avoiding sucking earth resources

You can always recycle the batteries and use it to create new batteries.

Recycling uses resources too.

But grid batteries directly save resources, in this case money saved is a good proxy for less resources used.

Payback is a prerequisite to people to actually buying your less earth sucking technology so while it might not be the end goal it's a goal nonetheless.

yeah indeed

Battery University ( https://batteryuniversity.com/ ) has a wealth of knowledge on this subject. LiIon cells are quite temperamental, especially when it comes to extreme climates as it turns out.

As long as they save more than their cost during their lifetime, who cares?

There are externalities to lithium ion battery production. Lithium is a finite resource and the environmental impact needs to be considered as well. Its shortsighted to only consider cost.

While this is true, these battery solutions tend to offset the much larger externalities of the fossil-fuel based technologies they help make redundant.

The li-ion externalities is mostly incurred once when mining. Although it's still in it's infancy, recycling li-ion batteries is already possible, and supposedly profitable. Especially when you can get an enormous batch of cells of exactly the same model as you would with this project.

The biggest problem in recycling li-ion batteries is that you may need different processes for different cells, so you need to sort them first.

> The li-ion externalities is mostly incurred once when mining.

I agree with your comment, but lithium is not mined. This is a common misconception and should be noted since we're chatting about externalities.


Actually, this has changed since the price of lithium increased 300% since 2014. Australia now has operating lithium mines, and there are mines in construction in portugal too.



There is significantly more extractable lithium than needed at any rational forseen rate of ramp-up. The impact of mining has to be borne by all real goods which depend on mines, not just this one.

You are adopting implied reductionism around the "cost" side without having done the work (in my opinion) to justify that this concern outweighs the upside benefits of ceasing to use coal.

PS a lot of the minable lithium which isn't in Chile, is in Australia. So, we have low-miles lithium!

Erlich/Simons anyone?

There's some interesting politics going on wrt lithium in Chile. Seems like the regulators don't want to increase output as lithium extraction uses a ton of water, and the Atacama is one of the driest places on Earth.

Presumably that is why the same company is trying to kick off in Australia as well, even though we have higher regulatory and labour costs here.

[0] https://www.reuters.com/article/us-chile-albemarle-exclusive...

Lithium is number 3 on the periodic table.

Human ingenuity not going to stop finding extractible sources anytime soon.

...is here where I mention the building potential of a helium shortage?

We need more gas Wells to extract helium from!

Lithium can be reclaimed from batteries. It's going to be a challenge for the industry [1], but it's also going to be very important.

[1] https://waste-management-world.com/a/1-the-lithium-battery-r...

Lithium is one of the more common elements in the Earth's crust. More abundant than many familiar everyday materials like copper.

Sure, extracting copper has costs too, but I don't see the same handwringing about that.

so is silicon, yet it is expensive.

As Li becomes more valuable, more methods of extraction will become worth it.

All materials are finite resources.

Why don't Samsung and Panasonic compete in this battery/energy storage market? Serious question.

They are. See their battery cells getting sold by the truckload? They just aren't pursuing vertical integration.

They will. Not everyone has tesla's commitment in making advanced battery systems. Some car makers will just want off the shelf solutions.

Important caveat: cells ≠ batteries

But the cells were designed by Tesla.

> Li-ion battery costs are falling at a constant ~15% per year and there is no real reason why this shouldn't continue.

There are of course a variety of good reasons why exponential cost reduction won't continue, such as the cost of raw materials, shipping, and so on - but most importantly that almost nothing works like that for long.

Li-ion battery manufacturing has seen a good uptick in efficiency due to quickly growing demand and a lot of money poured into squeezing out efficiencies, but there is no reason to assume exponential cost reductions to continue indefinitely. Indeed, it does't work that way for nearly any other industrial product, and (current) batteries aren't special in any way that would make them obviously different.

> Similar to what Moore's law did to semiconductors ...

Actually it is not similar at all. Semiconductors were actually special. There was an exponential reduction in feature size for many years, which led to exponential increases in performance, power efficiency, etc, per dollar.

The massive gains were a direct result of the underlying process being scaled in an exponential manner. Almost nothing else works like this, certainly not batteries. The basic chemistry and efficiency of batteries, including Li-on has been pretty much the same for decades. There are occasional improvements in chemistry or anode construction or whatever, but these are a few % here or a few % there, and many claimed improvements don't pan out at all [1]. That's nothing like the doubling of transistor density that continued for decades. In particular, the total storage of batteries is related to number of atoms of the active ingredient, and that generally puts a fairly hard cap on size and other efficiency factors.

Batteries are becoming cheaper because the production has been scaled up and efficiencies of scale achieved, but this will probably follow a similar curve as for any other popular product like lettuce or vehicles. There is no magic [2] and you'll hit a wall pretty quickly.


[1] Just go back five years and look for "big" battery news, e.g., big suggested improvements in any characteristic and see if any of them are being used today. Very few are.

[2] Of course there might be magic in terms of a very different battery chemistry, or some totally new way of storing energy that replaces batteries. There have been a lot of contenders over the years, but very few winners. A look at the periodic table also indicates that when it comes to batteries you can do better than Li-ion batteries, but not that much better.

TBH, I'm not really following your logic here. While obviously a 15% reduction in cost cannot happen yearly, the Moore's law comparison is still relatively accurate.

Those Lithium Ion batteries that haven't changed in decades? They were only commercially released in 1991, less than three decades ago.

I feel like people have a hard time seeing that a curve is still exponential when it moves at ~4% a year, as batteries have for the past century or so. But that still means that the technology could effectively double in ~15 years. How many ICE applications become irrelevant at that point? And which ones become irrelevant at various points in between?

The battery revolution is in full swing.

> Those Lithium Ion batteries that haven't changed in decades?

I mean the basic chemistries haven't changed in decades. Li-ion batteries were understood and experimented on long before they became commercially viable.

The basic chemistry is the same as it was back then. There have been various improvements in packaging and chemistry/anode tweaks that have maybe resulted in a doubling of capacity in that time.

> I feel like people have a hard time seeing that a curve is still exponential when it moves at ~4% a year, as batteries have for the past century or so

It is actually a hard problem to see if something is exponential at very low growth rates. Like the economy used to grow at 5%, then 4%, then 3%, now 2% - is it really growing "exponentially" or are we trying to fit an exponential curve to something sub-exponential?

After all, if you take the measurement of anything at times T0 and T1, you can calculate the rate of growth in % terms, which by its very units implies exponential growth, but it may not be.

So if Li-ion batteries keep dropping in price by say 15% +/- 5% for the next five years, you won't really have enough info to say who was right. You can fit other curves to that data. Only when you have many years with a high enough growth rate, like Moore's law, can you really be sure exponential is the only curve that fits.

> The battery revolution is in full swing.

I don't disagree - batteries are everywhere and becoming cheaper and better in many respects. It just won't look anything like Moore's law long term.

I see your point now, and I largely agree with it. I do think that some of the same problems apply to Moore's law, though. At any given point, it could have been off by a significant margin and occasionally looked really dicey.

Basically, predictions are hard. :)

The reason the ongoing drop in battery prices matters is that they are essential for the saving the environment by getting the planet off of fossil fuels.

That being the case, the relevant question is not whether the prices will continue to drop forever at the present rate. Rather, the question is whether they will drop low enough to make the transition possible.

Well, they are already low enough to do that for some uses, and a good deal more price reduction is expected in the coming decade, so it seems the answer is yes, they will drop low enough.

There are still orders of magnitude between current batteries and the theoretical hard cap. Current batteries throw away enormous capacity due to the safety constraints in preventing thermal events. Lots of folks looking at how to solve that problem.

And what then? In term of energy contained in atoms, current batteries are many, many orders of magnitude away from the theoretical maximum energy density of matter. (And so is liquid hydrocarbon fuel.)

> There are still orders of magnitude between current batteries and the theoretical hard cap.

Not at all. Existing cathode materials have a theoretical coulombic capacity of about 200 mAh/g (mostly less than this value, a few more have more). So for a 45g cell like an 18650, you are looking at 9,000 mAh maximum in the impossible world where your battery is 100% cathode, no anode or electrolyte. Those cells are already > 3000 mAh, so there is no way there are orders of magnitude between current batteries and the hard cap.

On the contrary, for contemplated chemistries the practical hard cap is probably less than 2x current capacity/weight values (since you need a significant amount of anode and electrolyte in practice), and almost certainly less than 3x.

> Current batteries throw away enormous capacity due to the safety constraints in preventing thermal events.

If by "current batteries" you mean current chemistries like Li-ion and existing and contemplated cathode materials, then this is not correct. The batteries have essentially the ideal material ratios within the existing manufacturing capability. That is, if you were willing to have a much less safe battery with the same materials you would gain almost no capacity. The main concession to safety is when a safer cathode material is chosen, like LiFePo over cobalt or whatever.

Batteries don't need to hit theoretical maximums, they only need to get within the ballpark of liquid fuels (maybe .25-.5x)? This will basically require the use of air in the reaction, since one of the reasons liquid fuel can store so much energy in such a compact and lightweight form is that it doesn't require storage of one of the primary reactants (oxygen).

last time i check liquid fuel has 50x the energy density of battery.

so to get to /4, you would need a 12x increase.

>since one of the reasons liquid fuel can store so much energy in such a compact and lightweight form is that it doesn't require storage of one of the primary reactants (oxygen).

the main reason is the covalent bond is stronger. using air will only double the energy density for fuel( 1x fuel instead of /2 fuel /2 oxygen.)

Hydrogen is a lot lighter than Oxygen, so you can increase the density a lot more than by a factor of 2.

Also important in some applications, such as aerospace, is that liquid fuel depletes in weight as you use it. Batteries are enough of a closed system that you still have to carry all of the weight around even when you're out of power.

The main reason semiconductors scaled the way the did, was due to economies of scale. The more refined the process, the more R&D money had to be put behind the next node to make it work, the more production you needed to justify the investment. The end result being that we currently only have 3 (?) companies that are actively working on bringing out the next-gen semi-conductor node.

The same principally applies to almost anything. In fact, for typical physical products the saying is that double the production will halve the cost. This is no different. Moore's law was much the same, just that it's scaling was much faster than anything seen before, such that every 18 months we were able to halve the costs. And of course semiconductors revolutionized almost everything.

For li-ion batteries, this seems to be every 4-5 years and has been for the past 20 years or so. Rumors have it that Tesla is even beating this...

Call it "Ric's law": every 4-5 years li-ion battery prices will halve ;)

Moore's law was very different because the underlying process was being scaled. CPUs just process information, and the inherent limit on the amount of "stuff" needed to perform say an addition has an incredibly small physical limit [1] which existing chips don't approach. So through scaling the feature size of chips, CPU manufacturers were able to take the same amount of silicon, the same size wafer, and get "double" the computational power (roughly speaking) out of it. So with about the same amount of "assembly line" work you can churn out something that is twice as fast in 18 months. After a decade its 100 times as fast, but your "assembly line" looks about the same.

That's not "efficiencies of scale" - that's fundamentally making something much better due improved physics, with the same amount of work. It particular, it would apply even to "small" producers.

Now don't get me wrong, CPU manufacture was also subject to traditional efficiencies of scale: the biggest fabs got bigger, and a few large players squeezed out the rest and were able to sell more and average our their R&D costs over more sales, but that effect is small compared to the million-fold improvement in the underlying physical design.

Batteries have no such scaling. The power stored is basically related to number of lithium ions and the capacity of the anode to accommodate them all. There are some small efficiencies: you can increase efficiency from 80% to 90%, but never to 2000%. You can make materials thinner or cheaper. You can change form factors to use materials more efficiently. You can standardize on battery sizes to make more use of a single production line. You can secure long term lithium contracts and open more mines.

These are all the traditional "efficiency of scale" things and they all hit a wall pretty quickly. You could probably easily sustain a 15% reduction for a while longer, but certainly not 40 years like Moore's law.

> The same principally applies to almost anything.

It doesn't, just look around.

What else has decreased in cost by a factor of a million over the past few decades? Cars have increased in popularity by many-fold since the 40s , and after an initial period of traditional "efficiencies of scale", costs have remained relatively fixed.

Look at any random food product that suddenly increases a surge in popularity, perhaps reaching a 10x sales multiplier: final cost and production costs don't drop 10x.

If all of a sudden we start eating 2 avocados every meal they aren't going to start costing 10 cents.

> In fact, for typical physical products the saying is that double the production will halve the cost.

I can imagine this rule is true... up to a point!

That's the "traditional efficiencies of scale" at work: it's usually an S-curve [2]. If you want some custom widget, you are probably going to have to pay $100 for the first one, and $1 each or whatever for your run of 100. When you order one million, maybe it drops to 1 cent. When you order a billion, they don't cost 0.001 cents though.

You don't have to take my word for it though: just look at any two big companies, but where one is bigger than the other, and look at their costs of production. Let's say Coke sells 5x as much as Pepsi: does Pepsi cost 5x as much to produce? Not all, they are virtually identical.

Many models of vehicles sell 10x or 100x of some unpopular rivals, but the production cost is about the same.


[1] https://en.wikipedia.org/wiki/Landauer%27s_principle

[2] Approximately, at least - although it depends heavily on the product. For example, the initial part of the curve might not be very flat for some things (e.g., with large fixed one-off costs) - but they almost all share the "rightmost" flat part of the S-curve.

While the scalability behind silicon was perhaps easier and faster, there are similar effects at work for batteries.

Li-ion batteries are typically spooled in layers [1] (see https://en.wikipedia.org/wiki/Lithium-ion_battery#/media/Fil...). The thinner the layers, the higher the capacity as you have a smaller distance between positive and negative layers. From my discussion with battery chemists, this is what is primarily driving the annual ~15% reduction, economies of scale also obviously playing a role.

Unsure what the theoretical limit of battery size layers is, and how far off we are from that, but the thinner we get those layers, the higher capacity the batteries per weight and also presumably price.

[1] https://en.wikipedia.org/wiki/Lithium-ion_battery#Shapes

> While the scalability behind silicon was perhaps easier and faster, there are similar effects at work for batteries ... The thinner the layers, the higher the capacity as you have a smaller distance between positive and negative layers.

I'm arguing it's not at all all similar. The capacity of a lithium ion battery is fundamentally limited by the amount cathode material it contains, along with sufficient electrolyte to support it, just like any other battery. Making other materials thinner, allows you to stuff in more of this stuff, and other changes in the arrangement may make the process more efficient, but up to a limit. There is hard cap to usefulness of all of these processes, at the "theoretical efficiency" and in principle softer caps before that point long before you approach the theoretical caps.

If you have a chance, ask the battery chemists you know what the best-case storage is for a particular chemistry and cathode material, compared to what is available today. I don't think it is more than 10x aware and is probably much less.

That's very different than CPU scaling where you started out many billions of times away from the physical limits of the computational capacity of the material, and many trillions away from the theoretical physical limits of computation.

So no, thinner stuff isn't going to sustain a 15% annual increase in efficiency [1]. In fact, I don't think think it will even sustain a single 15% increase from today until the end of time.

Of course, there are many other vectors along which battery efficiency can increase when the denominator is "cost", even if the storage/size doesn't increase much. You can increase manufacturing efficiency. You can introduce new form factors. You can tweak the chemistry. You can carefully match the required discharge characteristics to the application. Outside of the battery itself, you can improve charging and discharging algorithms, you can use finer-grained control over smaller groups of batteries, you can improve thermal management. However, these are just in the range of normal industrial optimizations that apply to any product. You can replace "batteries" with "lettuce" in the above and come with a similar list.


[1] To be clear, there is no 15% increase in battery efficiency per year, when measured by volume, weight or other physical characteristics: that stat must involve "price". Panasonic, the best and biggest Li-on player out there, has barely budged in efficiency on their headline battery, the 18650.

> ask the battery chemists you know what the best-case storage is for a particular chemistry and cathode material

It's entirely possible that with an exponential increase in production volume (i.e., funding) we could see some new chemistries appear.

Compare to Silicon Carbide (blue LEDs) and Gallium Nitride (power transistors).

It is possible. In fact, I definitely expect to see new chemistries and anode/cathode materials appear.

The question is how much it will buy us.

Unlike other domains where theories or algorithms or medicines or whatever appear almost "out of thin air", the periodic table is limited and the mechanism of battery operation is well understood, so I think there is already a pretty good grasp on the possible materials that can be used, even in theory.

For example, Lithium is used for a reason, something like it's electron carrying capacity per unit weight. There are no other elements waiting to be discovered that are going to be better. Cathode materials are more complicated, but I don't think there is any order of magnitude improvement hidden out there.

I could certainly be wrong.

Well it happened in the solar module market[1]. And batteries are similar in many ways. They have a lot of government/policy support (rebate programs, pilot programs). Solar technology didn't change much during this period either (and in fact, the more advanced/novel technologies failed rather dramatically), a lot of the cost reduction was due to better manufacturing efficiencies and scale. I also think that because both of these technologies are older, they are less likely to be impacted by patents and monopolistic enterprises that can force prices higher. So that helps as well.

[1] https://www.greentechmedia.com/articles/read/tracking-reside...

> Well it happened in the solar module market[1].

What is "it" that happened? If you are talking about sustained exponential cost reductions over a period of decades, like Moore's law, then maybe it did happen from a very high starting cost, but it won't continue.

Any market can undergo a rapid reduction in prices over a short period of time, as a product increases in adoption by one or more orders of magnitude.

You could fit an exponential curve to that growth, but ... it will almost never be sustained. The future is what we are talking about here.

Let's take solar modules as an example. From something like [1] prices have dropped from about $4.00/watt to $0.30/watt in 10 years. So that's a price drop of about 23% per year (each year is 0.77 the price of the previous). So today, at 30 cents/watt a 300W panel (the big ones you see on houses) is about $90.

If that is really a sustained exponential drop, those same panels will be $6.75 in 10 years. Possible? Yes. That said, I don't think you can find almost anything that big and heavy almost anywhere for $6.75. Maybe bricks or gravel or something, I'm not sure.

10 years later, those same panels will cost 50 cents. Possible? No way. You aren't going to ship a 300W panel anywhere for 50 cents. You aren't going to have space in your warehouse for something that big for 50 cents. You aren't going to be able to buy even the basic raw materials like glass and aluminum for 50 cents.

There's a common theme here: for something to scale exponentially, at a fixed size, every part of the process has to scale exponentially. The cost of shipping was irrelevant when the panels were $1,000, but it becomes pretty important when you are trying to ship something that weighs 100 lbs across the world or even a country and sell it for less than a dollar. The basic raw materials are a pittance with $500 panels, but they dominate the cost if you are trying to sell them for 50 cents.

The only way this exponential scaling works is if you can make something roughly the same size exponentially more efficient. That's that happened with CPUs. The CPU itself was more or less the same size for decades. They made them in similar fabs. There were some "traditional" efficiencies of scales thrown in, like moving from 200mm wafers to 300mm wafers, but the only thing that allowed exponential improvement was that the chips themselves became a million times more efficient without increasing in size or (mostly) the consumption of any raw material.

CPUs didn't scale up a million times by building a giant fab the size of a country, and using wafers miles across and mining silicon from the moon, which would be how a traditional process would scale up: they scaled up by becoming internally a million times more efficient.

Solar cells don't have that type of scaling available to them. There are hard limits on the efficiency (which is already above 20%) based on the physics involved - but even without any reference to cell physics there is a hard limit at 100% which means the efficiency upside is at most a one time 4x gain from here.


[1] https://commons.wikimedia.org/wiki/File:Price_history_of_sil...

Oh come on! No one here, other than yourself, has tried to claim that exponential cost reductions will continue indefinitely. But it is a fact, that solar experienced that type of cost reduction for a period of 2-3 decades. It's very unlikely to continue on that trajectory, but it doesn't really matter because solar is now one of the cheapest forms of generation on the market at this point.

Batteries are in a similar position as solar was a decade or two ago. The grid operators desperately need storage capabilities, and li-ion is one of the more promising solutions, but it's still too expensive. But another decade of cost reductions can change that. No one knows for certain if it's possible, but like I said in my original post, no dramatic technology changes are really needed, just better logistics and scaling could be enough.

> Oh come on! No one here, other than yourself, has tried to claim that exponential cost reductions will continue indefinitely.

The OP did, which is what I was responding to. He mentioned the current exponential decrease in battery costs, and said "I see no reason for that not to continue".

They then drew a direct analogy to Moore's law to explain how such exponential gains can be sustained. I disagree.

Of course, even the GP probably agrees they won't continue "indefinitely" but my claim is that they can't even continue for very long (the higher the rate of cost reduction, the shorter it can be sustained).

> But it is a fact, that solar experienced that type of cost reduction for a period of 2-3 decades.

Kind of, there were certainly long periods of stagnation in solar panel costs, but also periods of large drops. It also depends how your pick your starting point.

One has to ask (as you did) whether today's batteries are more like the low-volume niche product of 70s solar panels, or more like today's solar panels. I'm willing to bet the latter, both because batteries have seen substantial investment to date (I'd wager much more than solar panels), and because the existing scale of battery manufacturing is already massive (c.f., gigafactory). Furthermore, there are no apparent revolutions in battery technology on the horizon.

So rather than being at the start of a precipitous drop in battery prices, I think we are somewhere near the middle, and the drops from here will mostly slow down not speed up.

That is a fair point re existing battery scale. However I would counter, that to date, the vast majority of that development and investment has gone towards batteries for small devices (phones and laptops, basically). Compared to utility scale battery packs (and to some degree electric vehicle packs), I imagine the manufacturing challenges are very different. For comparison, the battery in my phone is about 13Wh, whereas the Tesla battery in question is about 130MWh, 8 orders of magnitude bigger. And we have only very recently started building systems like that. While a 10x reduction in cost certainly might be a stretch, I wouldn't be surprised to see at least a 50% reduction in the next 5-10 years.

You might be right about these large scale systems.

Are they using significantly different technologies for the individual cells? I always found it weird that the large battery in a Tesla, for example, was just made up of thousands of 18650 cells that are probably smaller than the battery in your phone. Is the Powerwall is the same?

Does it get any different at larger sizes? Obviously stuff must be different outside of the cells, even if the cells are the same.

This is just based on my memory, but I think they use different battery chemistries but use the same cell size (18650). I also thought it was weird that they were using 18650's when I first found out about it, but I think the need for thermal management actually makes the smaller cell sizes ideal.

Of course this is also why I think there are some cost reductions on the horizon, as current EV and grid tied batteries are basically just a bunch of laptop batteries thrown into a fancy box.

> but I think they use different battery chemistries but use the same cell size (18650)

I also read something like that. I suspect it is more of a tweak than anything major. No doubt it is the same basic chemistry but perhaps with minor tweaks to the various ratios and material thicknesses and so on. The Tesla batteries are a single-application cell, so you know exactly the maximum discharge current, the maximum charge current, the temperature parameters, and so on, whereas a generic 18650 has to balance those for a "typical application" or whatever. See for example the Samsung high-discharge INR18650 cells which trade off capacity for higher max discharge current.

OTOH the other hand I also heard the early Teslas were using exactly the Panasonic 18650B cell. They could both be true: maybe it was a stock cell in the early days and they tweaked the formula later in concert with Panasonic as their volumes rose. There was no big evident spike in capacity vs weight though...

> as a product increases in adoption by one or more orders of magnitude.

/aside With world human population forecast to decline, efficiences and economies of scale will be less in the future.

The real reason we need strong AI - as consumers.

> Li-ion battery costs are falling at a constant ~15% per year and there is no real reason why this shouldn't continue.

Why would that continue? Surely materials costs become more significant as other costs go down, which must be harder to reduce?

Manufacturing is rapidly scaling up. There is so much lithium available in the world (even commercially reasonable to extract from the ocean), that there is much room for per unit costs to decrease before you encounter lower COGS bounds (evaporation + transportation costs).

More importantly, a ton of lithium mined will be used for decades; when all of the Model S/X/3 battery packs are end of life (10-15 years from now), those modules are going to be remanufactured into stationary storage (or recycled entirely through a destructive extraction process, depending on degradation and next use case). This is similar to how your recycled pop can might end up in the aluminum used in a new light truck or an aircraft fuselage (edit: poor example; a better example would be automotive parts that are remanufactured and put back into service).

The smartest thing Tesla ever did was finance battery manufacturing using luxury vehicle margins (stoking demand with a sexy, desirable brand), and have those customers (including myself) finance the depreciation and capital carrying costs of those battery sleds they'll use again in the future. I am not a Model S owner; I am the temporary user of 100kw of energy storage, which will eventually make it's way into stationary storage where mobile energy density (ie pack degradation) isn't as much of a concern.

This is the first time someone has so clearly made TSLA’s value so clear to me. I get it. Damn.

JB Straubel's Redwood Materials is another interesting piece of that picture.

The smartest thing Tesla ever did was finance battery manufacturing using luxury vehicle margins (stoking demand with a sexy, desirable brand), and have those customers (including myself) finance the depreciation and capital carrying costs of those battery sleds

Panasonic and Samsung make Tesla's battery cells; Tesla simply assembles them together. For now they're the big kahuna because they've locked up output through contracts but when they don't control the primary input to their "biggest product" they're at the mercy of their suppliers and the market.

You continue to be bearish for a company that successfully executes over and over (from Roadster 1.0 to hundreds of millions of dollars in free cash flow). Strange.

Having worked in the accounting industry, what Tesla has cannot properly be called free cash flow and were musk to make such a statement he would face SEC investigation and shareholder lawsuits.

I think we also disagree on Tesla's execution. Tesla has just barely managed to avoid death many times. That's not successful execution unless you define success as not failing.

Well, they are not just another new kid in the block. When their goals are to mass produce electric vehicles; to make it a viable option in the market; to move the entire industry in a new direction; to create advanced battery production capability, in my mind they have been nothing but a resounding success.

I guess the implication is that the manufactured cost is still significantly higher than the cost of the raw materials, which implies lots of room for improvement.

I wish more people understood that lithium and aluminum are transported almost entirely around the world on tanker fuel before they're made into a product - and then it's STILL cheaper to make new batteries than to recycle them.

I don't know enough to say the true impact is different than the stated impact or anything like that. But I have my suspicions that something isn't what it seems with lithium production.

Very late response, but most of the gradual decreases in price have been to increases in specific energy (kWh/kg). Smaller batteries cost less per kWh because there is less material in them.

Something like 80% of a typical lithium battery cost is drying it in an oven before sealing. Lithium cost is about 5%, possibly less. The other materials involved actually make up more of the cost than the lithium.

Interesting. Do you have a source for this? I know nothing about the manufacturing process.

> This is why Tesla is valued higher than GM, Daimler or pretty much any other car company.

I have heard a different theory from a friend working in finance. He said that most of a GM/Toyota car is made by suppliers, but Tesla does almost all the components of its cars by itself, capturing all the profits. He said that most car manufacturers are actually only car assemblers.

Similarly, there are many PC brands like Lenovo or Dell, but they have to share their profits with suppliers like Intel/Nvidia/Samsung/Microsoft. Apple, also captures a lot of profits because they do not only assemble, they also make software and hardware.

At some point disposal will have to be priced in unless the hope for an economically viable (as in self-funding) recycling process somehow materializes, that so many people seem to conveniently assume to be an inevitable outcome of progressing time. Permanent dump & replace at cheaper and cheaper prices could end quite ugly.

Recycling batteries can supposedly already be profitable. Especially if you can get a large batch of the same cell type:


> Working with Umicore has allowed us to completely recycle the Roadster battery packs profitably, without special financial incentives necessary to promote recycling

Visited a local recycling facility. The costliest part is sorting+separating all the different materials. The costs for that alone literally dwarf every other stage of the recycling process, and it's not one that can be easily automated.

If you have a mass quantity of the same type of good, you can avoid most of these costs.

The raw materials are certainly valuable enough to be worth recycling, assuming it's not terribly hard to separate them back out from each other.

But suppose we never figure out a good way to recycle these batteries, and we just have to throw them all in a landfill and keep making new ones. Is that actually so terrible? There's nothing toxic in a typical li-ion battery, so basically we just have inert materials that were taken from the ground being put back in the ground. Mining for nickel/cobalt/lithium is not great for the environment, but the effect is pretty localized, so a "disposable battery future" is probably still highly preferable over the fossil fuel status quo where the entire planet is fucked.

>But suppose we never figure out a good way to recycle these batteries, and we just have to throw them all in a landfill and keep making new ones. Is that actually so terrible?

I mean... yea?

I don't know but I look back to the 2006 Jeep Wrangler being almost entirely recyclable steel and had an effective life of 40+ years if taken care of. Then I look to new cars using composites and lithium that WILL go into a landfill 20 years or less because they're just not fixable in the same way, it's cheaper to write off of an insurance claim than to fix.

It almost seems to me there is no free lunch, but that people like new and shiny and the company with all the tech is going to be popular with tech people.

In its lifetime, that Jeep will dump 100+ tons of CO2 into the atmosphere, which spreads over the entire planet and is near-impossible to concentrate again. The impact of disposal of the car itself - a couple of tons of solids in a particular place - is not even close.

And if we're going to talk about people's irrational thought patterns about the environment... I nominate the idea that landfills matter more than atmosphere dumping, which seems to be based on the fact that landfills are more visible.

Nowhere in your analysis is the fact that the raw materials for these cars have to be mined and refined in a way that currently requires the burning of fossil fuels. It is not just the disposal of the materials themselves that is an issue.

Panasonic makes Tesla's batteries. If someone paid Panasonic a little bit more money, what's to prevent them from using the same batteries?

I would love to see the engineering details around the 'moat' that Tesla has with batteries.

those batteries are coming from the gigafactory, which is a joint-venture with tesla. the batteries produced there aren't about to start going to other companies.

if other companies wanted to build a new factory with panasonic, perhaps they could do that....and then we'll start to see their results sometime in the 2020s....

Panasonic's solar roofing products from its joint venture with Tesla in NY are already being mostly sold to Tesla's competitors...

AFAIK, Panasonic doesn't make solar roofing?

Source on their panels from Buffalo mostly going to non-Tesla installers?


And that is a pro-Tesla source. I had a WSJ link before that I don't have time to look up.

I'm only guessing here, but the chemistry they use for Teslas battery cells seems to be developed in very close collaboration with Tesla. I wouldn't be surprised if they have an agreement that prevents them from selling the exact same chemistry to others.

The chemistry might also be finely tuned to work with their own battery management units, though I'm less sure of that.

The cells themselves are fairly standard cells. The secret sauce for Tesla has always been how they assembled them together and integrate with other components into the finished battery.

This is the same as Anker; they use the same lithium cells in their products as almost all of their competitors. Their secret sauce is assembly the cells together with other components to make the final products.

That isn't really true. The cells are not standard cells. They have their protection removed to give them more volume and also the blend of electrolytes used is also proprietary.

The "standard cell" would be without protection in the first place. It's not like the batteries materialize out the ether with protection circuits which are then removed for Tesla: the basic product Panasonic sells are the bare cells.

On top of those bare cells, third parties may add protection circuits, or maybe Panasonic does it themselves in some cases.

I believe Panasonic makes the cells that go into the Model X and S. But Tesla makes the cells going into the much, much higher volume Model 3.

> Panasonic makes Tesla's batteries. If someone paid Panasonic a little bit more money, what's to prevent them from using the same batteries?

Panasonic makes the cells, which is easy to do, to scale and to copy. Tesla's added value is the charging control for each cell in the battery pack.

The cells are probably the hardest part of the system to manufacture. Damn near anyone can make a BMU (and they do), though there is a fair amount of effort needed to design a decent and affordable pack. Very few entities can make a decent lithium cell.

> Damn near anyone can make a BMU (and they do)

For small currents, yes. For the huge current spikes both in draining and charging, or the continuous massive loads of supercharging? No. Same for the actual science: figuring out a way to pull/push hundreds of amps to the pack while taking care that no single cell is overloaded/overheated or that faulty or degraded cells are taken care of.

No, making good cells is actually the hard part. The charging electronics is simple and easy. You can buy these ICs for cents from the usual suspects. Or does TESLA have some special, hard to circumvent, patent on the charging algo?

It's more than charging. It's cell monitoring, cooling, protection systems. EV Battery packs are complicated.

Making a BMS is by no means simple or cheap in the range of cents. It's hard to make good cells, but creating a good BMS, designing an easy way to at fuse wires, creating cooling bands and figuring out how to do so on a huge scale is just as hard

Tesla has promised not to stop anyone using its patents in furtherance of the same mission to accelerate the advent of sustainable transportation.


I'm curious on how dominated this is by ability to mine the raw sources. Do they recycle well? Or are they just that ubiquitous that we don't have to worry about it, at all?

The metals recycle well and very cheaply, with no need for human sorting like with plastics. Those make up the bulk of the material cost.

Graphite and lithium are the only things that aren't currently recycled. Lithium is too cheap right now- it makes up on the order of 1% the cost of a cell. It's more common than lead. We're very unlikely to have lithium supply problems. Compare the 7 billion tonnes of coal production, or 5 million tonnes of lead, to the 80 million cars sold annually. Mining in general can be scaled to far larger than anything car batteries would need.

Graphite is more of an issue. Battery graphite is very high quality spheroidal grains, roughly 55% synthetic and 45% "natural"- even the natural stuff goes through a huge amount of processing. Synthetic graphite can be made from anything, but natural graphite has slightly higher specific energy. Both types take a great deal of energy to manufacture, and natural spheroidal graphite would be a lot more expensive if not for Chinese and American coal.

Batteries are burnt as part of the recycling process, and even if they weren't there's no really good way to recover the graphite. So that probably puts a bit of a floor on li ion recycling savings. The elemental metals recovered are also not appropriate to directly turn into batteries, so they will probably get sold on the open market for lower profit.

The bottom line is that the only constraint on manufacturing batteries is the cost of energy.

Thanks, just to paraphrase back to make sure I understood:

The lithium is not recycled, due to economies of scale.

Same for the graphite.

There is no foreseeable shortage of either graphite or lithium, with the scale that we use it, and the scale that it can be found in the wild.

The majority of the materials in a battery, however, are recycled quite easily.

That right?

Are there any concerns to the mining of either element? I've seen some scare posts, but don't know enough about them to know if they were worth taking seriously.

> The lithium is not recycled, due to economies of scale.

That's part of it, but even if we had very large battery recycling operations it probably still isn't really worth it. It's not hard to get 90%+ recovery but the amount of lithium in a battery is ~3% by weight. Spodumene, one of the important lithium ores, is up to 8% lithium.

> Same for the graphite.

Graphite is more of a technical thing, it's pretty difficult to extract it and it's pretty worn down. The physical structure is very important to performance and manufacturing is virtually all of the cost of creating graphite- so having the actual raw material isn't worth all that much.

More than graphite, I'd actually prefer to see the organic materials in a li ion battery dissolved off and then distilled. That isn't economical though.

> There is no foreseeable shortage of either graphite or lithium, with the scale that we use it, and the scale that it can be found in the wild.

With any scale we could use it, there's no way we would run out. If we mined as much lithium as we do lead, we would have enough to make every car electric with ~200 kWh batteries and no recycling. And as I said, lithium is more common than lead.

> Are there any concerns to the mining of either element? I've seen some scare posts, but don't know enough about them to know if they were worth taking seriously.

Graphite is mined in the same places coal is, but very roughly 5 orders of magnitude less. It can also be created completely synthetically from any organic matter, same way they make charcoal or carbon fiber.

Lithium as it is currently mined is one of the least environmentally impactful extractions. It uses up a lot of groundwater which is a problem in some places, but it's more about it not being replenished properly. There's no runoff like there is with heavy metals in Africa. There's pretty insignificant land use. The chemicals used in purification are super benign- things like lime or acid, in millionths or billionths of global use. Brine mining means you don't need to dump any rock anywhere, there's no hole, there's no significant dust or blasting- it's just a very large water well.

Better hook that up to some solar panels then...

What a great reply.

Other sources of lithium being exploited, lithium is the new oil.


This sounds alarming, but one difference I think is that a lithium batteries are not fuel in the sense that they are consumed immediately like gas/diesel. Of course they have a limited lifespan, but I read elsewhere that lithium batteries can be partially recycled for raw materials.

Lithium is an element. What happens to lithium batteries over time that makes the lithium no longer lithiumish enough?

I'm also curious on this. My understanding is that common computer li-ion batteries basically expire after a few years. Whether you use them or not. Sorta sucks, as I used to buy spare batteries for laptops. Turned out, the spares would be as bad as the worn out one in the computer.

The anodes and cathodes of the cells tend to acquire a film of lithium and electrolyte oxides which reduce the coulombic efficiency of the cells, i.e. it makes it harder for the electrons to interface between the anodes and cathodes. I don't see a reason why we cannot extract the lithium from old cells for reuse, other than economic efficiencies of fresh lithium supply versus the cost of sorting, unpacking, and extracting from old batteries.

> lithium batteries are not fuel

I really hope that this is not exactly what the desperate end of the disposal chain will look like once it is fully formed.

Yes, a big plus for lithium. However, demand and usage will only increase need for lithium out in the field and that could prove a bumpy curve and with all resources of a finite amount, we hit a plateau. Question is, will demand outstrip supply or will supply manage to maintain a pace that stays at least equal to that demand. It is with this in mind, that I call it the new oil.

You can evaporate sea water to get it. For now, seems functionally infinite.

Except we don't have any way to do it economically.

What’s expensive about it?

Yes, I have similar thoughts, though I guess worst case it's roughly the same as mining coal but without the CO2 (and other unhealthy) emissions of burning it.

Downvoted? I was intending to express that even with mining the raw materials, etc. it is probably a net positive environmentally.

It's probably possible to commercialize sodium-ion batteries with carbon anodes.

Not necessarily price competitive with highly developed lithium ion batteries using the cheapest to access minerals, but cheap enough to make the world go round.

And an intermediate step to ultimate recycling is that car batteries still have usefulness after they lose half their capacity (but not as a car battery). They can be used in say a storage system for home power. And this kind of recyling is already happening. Tesla has discussed this, and I believe other ev car companies are doing it already too.

Interesting is there a moore law for energy density ? I've been looking for this since years but couldn't formulate it as clearly

Energy density has a fixed upper bound for any given battery chemistry: the amount of energy that would be bound/released if all of the material in the battery would participate in a cycle by turning from one state to the other and back. The amount of energy per reacting molecule/mol/kilogram is fixed and well known. Someone who is not as terrible at chemistry as me won't find or hard to come up with concrete numbers. And those numbers are hard constants, you can only come closer to them (within a given battery chemistry), they are impossible to exceed.

And another angle: our perception of energy density increase is heavily disturbed by the much faster reduction in cost, we are just not very good at telling those two apart.

true but how far are we from chemical theoretic optimum ? manufacturing of cells is very suboptimal at the atomic level.

The trouble is making the cell chemically stable with a way to get current in and out. We can't know what configurations we'll find where this works. Maybe tomorrow a catalyst that changes everything will be found and our batteries suddenly have the energy density of TNT.

Permanent magnet strength also follows a similar pattern, the strength doubling roughly every decade or two.

Even more interesting

I'll call it Rick's law: Roughly every 4-5 years, Li-ion battery prices will halve

Let's see if it sticks

> This is why Tesla is valued higher than GM, Daimler or pretty much any other car company

Tesla's market cap, rounded to the nearest billion dollars, is $65B. Other large car company market caps:

* Toyota: $195B * GM: $46B * Daimler: $57B * Volkswagen AG: $71B * Ford: $33B * Honda: $49B * Nissan: $36B * BMW: $47B * SAIC Motor: $42B

> Tesla at it's heart is a battery company with products built around that.

I disagree. Tesla is a software company with products built around that. A Tesla car is a computer running their software, with certain physical enablements attached.

I wouldn't get too comfortable owning business based upone Li-ion batteries, especially in long run. Li-ion can replace traditional combustion engines in some niche applications but is far away from completely replacing it. To me batteries feels like an intermediate step b/w engines and next energy source that's capable enough.

Batteries based businesses will do well for now but they should keep an eye out for new developments in energy sources for on time strategy changes.

False dichotomy. Batteries don't need to completely replace international combustion to have a massive impact. Right now they're superior for probably 60-80% of cases and that number is increasing rapidly.

> from 2025 onwards traditional internal combustion engines will not be able to compete on price with electric cars

We bought a 2 year old Leaf (30 KWh) recently after I worked out the TCO for it. Here's what I discovered.

We pay a lot of electricity here in Japan (I think it's about 30 cents per KWh where I live). So a full charge would cost us about $9 if we charged at home. Driving carefully we can get between 200-220 km on that -- so about 4.5 cents per km. Gasoline costs about $1.50 per litre and our old car had "mileage" of about 7 l/100km or about 10.5 cents per km (that's a lie because we have a 12 year old car -- it's really about 10 l/100km, but newer versions are near are more efficient, so I'll use that number). We drive about 1200 km a month (I say "we", but really it's only my wife -- I don't really like driving :-) ). So the difference is about $72 a month.

We also have to pay "shaken" here in Japan. This is a bit like the UK MOT. You have to get your car in essentially perfect running order every 2 years. It usually costs about $1000, or $500 per year. Because it's an electric car, the shaken costs are assumed to be small. We "prepaid" our shaken (i.e. bought insurance) for $200 for the next 4 years (or $50 per year). So that's a savings of $450 per year or $37.50 per month.

So rounding up, we're up to about $110 per month saved. On top of that there is almost no maintenance cost (oil changes, air filters, timing belts, etc). Let's say $120 per year saved (to make the math easy ;-)). So that's $120 per month.

But on top of that, we got this crazy deal from Nissan (or the government? or both? I'm not sure) where we get free unlimited recharging for 2 years and $20 per month after that. So that's a savings of $54 per month for the first 2 years and $34 per month after that (as long as we charge at the fast charging stations -- note, there are some negative implications for battery life for using the charging stations and it is a PITA to go and charge it all the time, so I'm not sure how true that savings will be).

Our previous car was a BMW 118i. The Leaf is every bit as good. If you turn the eco mode off, it has similar power (but of course a much nicer torque curve -- flat) so it's easy to pass or get out of trouble. In eco mode, it's a bit sluggish, but not really a problem 95% of the time. The Leaf has slightly better handling, but also slightly larger turning radius. Similar fit and finish. The Leaf seems slightly more spacious and has similar storage space. In actuality very similar cars in almost every respect, however the BWM is quite a bit more expensive.

So apart from range (which isn't a problem for us in any way), it's a pretty clear EV win for that kind of mid-size "nice" car. Probably it would be quite a bit closer if I were to compare to a Toyota Prius (especially in Japan where you can get a rebate), but I was amazed about how cheap EVs are now. It's pretty hard to match. If batteries come down in price, it will be impossible for sure.

Not sure how the numbers would work out in other parts of the world (especially in a cold climate), but it really is getting to the point where ICEs don't make sense any more.

I'm not sure if costs of cells are the dominating factor. My gut feeling would be that the power electronics/inverters and transformers are at least 50% off the cost off such a system. And inverter costs seem to be falling more quickly.

Does somebody have numbers?

Those are some pretty big claims. Care to share some evidence?

Need them to get smaller too though.

For anyone that might be interested, here are live graphs representing different generation types and their current cost for the Australian energy market (caveat: not all of Australia):



South Australia - where the battery is located - is an outlier in the Australian market due to its relatively progressive energy generation composition. It's worth noting the battery charge/discharge values depending on the market price of wholesale electricity. Arbitrage in action! :)

The application is open sourced and available here:


Ontario has a similar site showing power usage. Key difference: replace Australia's coal with nuclear:


That's a horrifyingly large amount of coal there for a developed country.

Because the left in Australia is deathly afraid of nuclear and the right finds that it constituents are those who work in coal, one of our major industries.

Our largest 3rd party, the greens just won't even consider nuclear, to them it's solar/wind or bust.

Yes, what would a country with a "sunshine coast" that is continually engaged in trying to keep the powerful rays of the sun off its skin want with solar power?

Nuclear would be ridiculously expensive for Australia. Renewables and gas would be achievable in under 10 years.

Australia has 34% of the world's low-cost uranium reserves.

Fueling a nuclear power plant is never expensive comparing to just about anything else there.

...and the government continually talks about building more coal! They love to call it "clean coal" and ramble about it every month or two.

Of course, they have not actually done anything at all, which is the definition of Australian politics.

Thank goodness for that! I hope their inaction persists, buying time for solar & battery infrastructure to be built and make nuclear redundant there.

I always like these kind of plots. Is there an explanation why in the last week the energy price went negative last week in SA but they kept running gas turbines? Is that due to insufficient capacity in part of the net or some special kind of long term contracts or? I have encountered this before but its sometimes claimed that gas power can be modulated within minutes why not here, especially since they very likely where aware of the negative prices well in advance.

Yes, there are longer-term contracts, only a portion of the power is traded at the spot price.

That said, you would think that the gas generator company could just bid the load they've agreed to supply under the long term contract into the spot market when the price dips negative. I assume there is a good reason why this isn't done.

There is also the excellent ElectricityMap site: https://www.electricitymap.org/

As an American living in the midwest, that map (while _excellent_) simply makes me sad. 60% of our energy comes from gas and coal. 30% comes from nuclear (I'm rounding in both cases). The remaining 10% comes from renewables (mostly hydro). It shows how much further we have to go in getting renewables to generate an actually significant amount of our energy.

So it cost $66 million and saved $40 million.

That's impressive. I assume most of the saving is from grid stabilisation, rather than supplying/storing energy but still.

Why is this not more wide spread? These figures suggest this is a no brainer. Am I missing something?

The South Australian grid was particularly degenerate, making this more profitable there than elsewhere.

It does make at least some sense in most places, though.

I remember there being a day earlier this year where the prices for wind-generated electricity in west Texas flipped. If you have to pay people to take your electricity (instead of spinning a generator down), why not store it for a later demand period?

The amount of energy that is stored in batteries like this isn't that big in grid-scale terms. For example, on the night that Texas wind generation flipped electricity prices into the negative back in September 2015, their wind turbines alone were pumping out almost 11,500 MW of power. This has a capacity of 129 MWh. It's useful for grid stabilization because it can start up almost instantly and fill in the gap until another generation source which can run for more than the 90 minutes the battery lasts can start up, but less practical for longer-term storage.

(The 90 minutes capacity at full output is pretty much an inherent property of lithium battery tech, as I understand it. There's a slight capacity vs power tradeoff which can be tweaked, but only within a relatively narrow band, and the maximum charging rate is if anything even less flexible than the discharge.)

Also, it looks like there's already a small-scale battery bank providing frequency stabilization using Samsung lithium ion batteries in West Texas: https://www.energy-storage.news/news/minimal-downtime-younic...

> The 90 minutes capacity at full output is pretty much an inherent property of lithium battery tech, as I understand it.

Even if that is true, that only means you need to expand your battery capacity and split into multiple banks.

It doesn't make sense to store something for later unless the storage costs are lower than the cost of reproducing what you need. A few periods per year of negative prices won't be enough to offset the investment in batteries.

I was under the impression that large scale energy storage is one of the big problems with renewable energy that has yet to be truly solved.

Don’t forget the stochastic control problem that needs to be solved to stop the whole grid blowing up!

Quick! Mine bitcoin for a day!

Superwog ep.5

This is immediately viable anywhere you're operating an inefficient single cycle peaker plant. The longer your battery can discharge for (4 hour, 6 hour, 8 hour, 10 hour), the more likely it's able to replace a peaker duty cycle when called upon.

Note that the amounts are in AUD dollaridoos, it's $48m USD for saving $29m USD.

The savings are because you can use the energy generated by green sources to charge the battery if you can't use it immediately. That's free energy you'd otherwise throw away.

It's not in AUD, it's in USD. From the linked article for cost -

"The French energy company revealed that the entire system cost 56 million euros (~$66 million USD)"

> The savings are because you can use the energy generated by green sources to charge the battery if you can't use it immediately

Not true. The system is used for grid stabilisation rather than large scale power storage. It doesn't have the capacity to power South Australia for more than a few minutes at most.

> Why is this not more wide spread? These figures suggest this is a no brainer. Am I missing something?

Grid infrastructure isn't exactly agile. It's politics.

At least in Switzerland (Swissgrid loco), this is not true at all (for AS and frequency control)

The complete process is documented end to end, free to see, and the enroll process in documented and "cheap" (~150kCHF, 100kCHF being for the warranty). You can start playing in the ancillary services field with 5MW, which is not that much.

PS: If a company in CH needs help in that field (process approval or swissgrid-compatible IT systems), let me know !

The particular grid economics of Southern Australia are not reproduced everywhere else. It is all about the dynamics and regulations of the spot market, existing short term generating capacity, and the capabilities of the other market participants.

The batteries didn't "save" $40 million of electricity, they enabled one entity (Southern Australia's power operator) to trade more efficiently against the other participants, who were the losers in this battery deployment in the form of reduced profits.

It is beginning to happen in the US. Battery adoption on the grid has been slow because the utility companies like solving problems by building new generation plants (natural gas plants mostly) or by building new transmission lines. They have historically always done this and they make a guaranteed rate of return on this type of infrastructure. This has led to lots of un-needed generation capacity and expensive transmission projects passed on to rate payers.

Regulators in many states are now finally forcing utilities to examine the use of alternative solutions to fix grid issues. They are finding that battery installations can do a better job than new generation or transmission in many cases and the batteries can be cheaper over the long run. It's just a matter of getting the utilities to try something new and get out of their typical playbook.

So it paid for itself in 1.65 years, which comes out to an ROI of ~52%.

Why is this not more widespread? There must be some barriers.

There are a limited number of grid topologies where a battery can add this kind of value. It's really unusual to be this extreme.

Correct, at the current price.

I saw elsewhere that battery price is going down 15% per year. So, over time, more grid topologies will be able to leverage this technology.

All grid topologies. Grids will be rendered obsolete absent forced support.

I think part of the savings don't go directly to the battery owner, but instead prevent the electricity suppliers from price gouging the customer.

Happens a lot with renewables. You personally don't capture all the value you provide. This is part of the reason that rooftop solar should get paid more than the going rate but even 1:1 rates get attacked as some kind of scam, even as they reduce peak load which may be literally 1000x more expensive than average.

Correct. A proper grid system would pay a premium for the size of the solar grid that fulfills solar-induced demands.

After that, solar should get paid grid rate.

I have no idea if anyone has bothered to calculate what the solar-induced demand is.

Unfortunately, they don't really reduce peak load anymore. With the solar-adjusted demand curve looking duck-shaped, the peak load is now in the late-afternoon/early evening

I'm in Australia and we recently committed to putting solar panels on the roof of our small office building. Pay-off projection in the estimate/quote was all of 2 years!

Nice! I had my solar panel installed on the roof of my house in 2015, and they have a pay-off projection of just over seven years. At the beginning of the year, my neighbor had solar panels installed, and we calculated his pay-off projection of just over four years (both of us took advantage of available subsidies).

And battery storage is only getting cheap, I believe at a rate of roughly 15-20% per year.

Yet we also hear that battery production is a bottleneck and the reason why automakers other than Tesla are so limited in their EV offerings.

Other automakers are limited in their offerings because they didn't commit with any enthusiasm until a few years ago, and the development time for a new car is at least that long. There are a whole bunch of new EV options coming to market in the next year or so.

It's new and the procurement cycles for these things are long. Also, Australia is coal country.

Judging from the article I think it's a proof of concept or similar stage.

But its not like battery technology is advancing so quickly, and prices dropping so fast, that this is only just becoming profitable. Based on these figures this would have been profitable years ago.

The only plausible reason I can come up with is that the 'savings' are very hard to attribute correctly, but then I still cant explain why no one before today noticed the potential savings and took a chance.

Anyone with experience in the industry have any thoughts?

(a) It takes several years to plan a project and then build it. So, this decision was made years ago, not "today".

(b) Battery prices (and pricing for the balance of the system) have dropped pretty rapidly, I'm not sure why you're claiming otherwise. There have been recent years where these systems have dropped in price by ~25%[1]. That's not insignificant.

[1] https://www.utilitydive.com/news/not-so-fast-battery-prices-...

By "that quickly" I was thinking orders of magnitude per year. This would have been competitive at 4 times the price. Depending on the details it might have been competitive at 10 times the (battery) price.

Was the decision taken years ago? This is the 100 days or free battery. But yes I accept the power companies may have been slow. But still it isn't just Australia that was slow, its the US, Germany, Denmark, the world.

>This would have been competitive at 4 times the price.

Not exactly.

Australia's high prices were not due to a technology failure, but a regulatory one. The power generators were manipulating the market causing extremely high peak prices, and essentially being allowed to get away with it. Most other countries don't allow the market to wildly fluctuate so much, so the payback is far longer. Think decades and not years.

4 * $66m = $264m / $40m = 6.5 ish years payback.

Not many investments offer that rate of return.

You may be right to suggest it may not be competitive in other locations though. I don't know.

He's right. Unless this was a media stunt for Elon's benefit (and it really doesn't look that way), the decision was made in a few days and the turnaround was 100 days: https://twitter.com/elonmusk/status/840032197637685249?s=20

And (B) is an issue. It's essentially deflationary economics. Why spend money now when it will be cheaper/more profitable next year? Once pricing on batteries stabilizes, you'll probably see more people willing to commit to big battery projects.

First off you don't know its going to fall next year. 2nd someone may sign a contract first.

The old sunk cost fallacy strikes again. You invest today because by not investing you forego the savings in the mean time. That something would be cheaper next year is not a factor, only the current expected ROI.

The sunk cost fallacy is most often stated as, it isn't worth getting rid of something because you've already spent the money on it. Its unclear to me if this is an example of that. I agree with your general thrust though.

Yeah, this is more of a reverse sunk-cost. If there is a term for that I don't know it.

I worked on software for trading energy/transfer/balancing capacity in EU market a few years ago.

EU is pretty good in that regard, it demonopolized the energy market, so if you build this battery yourself on your land you can just entered the market and start selling balancing offers. You will easily outcompete traditional producers and consumers on that market if the article is right.

The widespread rule of thumb was - batteries on grid level don't work. Seems this isn't true anymore.

>But its not like battery technology is advancing so quickly, and prices dropping so fast, that this is only just becoming profitable

I wonder if there was even the capability to manufacture such a large order at the given price point before Tesla built their gigafactory.

guess: Its a politics driven industry and no-one wanted to take the chance to try something that hadn't been tried anywhere else in the world at this scale before.

Battery manufacturing is actually advancing fairly quickly. The costs has been dropping at a pretty steady, steep rate for last 15-20 years.

> I assume most of the saving is from grid stabilisation, rather than supplying/storing energy but still.

Yes, the entire reported savings was by avoiding building a fast-response generator, which would cost tens of millions to maintain each year.

From the article:

> Has contributed to the removal of the requirement for a 35 MW local Frequency Control Ancillary Service (FCAS), saving nearly $40 million per year in typical annual costs

The article several includes other significant benefits as well that aren't even included in the $40 million.

How long do these batteries last?

At least a decade. This is why most grid services/frequency response revenue is going to be cannibalized from legacy thermal by utility scale battery storage.

Energy arbitrage is still a thing, but a smaller percentage of revenue compared to grid services (at least in Australia).

Disclaimer: TSLA investor

Long enough for this to be a no brainer.

Also the biggest issue with consumer batteries is typically heat management. Industrial batteries with proper thermal control systems will exhibit much better lifespans than a typical iPhone. Thus you should adjust your expectations for these batteries compared to what you’ve seen in consumer electronics.

That's true and the reason that electric cars will work much better than most expected, with no need for a battery change during the life of the car. Here though part of the reason for the huge savings in one year is the market was in such dire need they've worked the battery hard. The return on investment is still stellar I'm sure, beating even the best initial estimates. But the battery will most likely not last as long as in the original estimates either.

if it lasts even 2 years it was already a good investment

...if disposal is free

Actually, lithium is quite valuable and can be recycled into new batteries. I don't have the numbers, but AFIAK, disposal is cashflow positive.

Edit: see hwillis's comment down below, he/she is obviously more knowledgeable about the topic than I am. I was wrong.

I read on Wikipedia quite the opposite: we don't recycle Lithium it because it costs 5 times more than freshly extracted lithium. https://en.wikipedia.org/wiki/Battery_recycling#Lithium_ion_...

If my math is correct, the battery needs to last at least 10 years to break even if you factor in the cost of recycling the lithium.

Recycled lithium might cost 5x more. Not that the disposal cost of a battery is 5x the purchase price.

If the battery pays for its purchase price in 2 years and the disposal cost is 1/2 the price of a new battery (doubt it's anywhere near that), then the it would still pay for the total cost of ownership in 3 years.

From what I understand, used-up lithium batteries are fairly non-toxic and can be safely dumped in a landfill. Still not zero-cost, but probably about as low as you can get. And they can probably recover some of that cost by recycling some of the other metals from them.

I’ve heard quite the opposite: recycling lithium is difficult.

Maybe the other metals in the batteries make it worth recycling, but not for the lithium recovery (with today’s tech).

EV batteries can be repurposed for small-scale grid storage applications, and therefore can have a second life for many years before they are finally broken down to raw ingredients for recycling:


Do aged lithium batteries lose charge efficiency, discharge efficiency or capacity?

Each loss would encourage different kinds of secondary uses.

Yes. Eventually, Li-Ion batteries will "puff up" due to chemical degradation and may even spontaneously catch fire.


This always makes me nervous. If I have some old laptops lying around, how worried should I be about them exploding? Does it only apply if they're in use?

I believe they experience all of those. But yes, there are many secondary uses, especially in situations where high energy density isn't required.

After the last economically viable use for electricity storage, however, there has to be an economic incentive to actually recycle the raw materials. Presumably this is when value of the raw materials exceeds the cost of their reclamation.

>> Do aged lithium batteries lose charge efficiency, discharge efficiency or capacity?

> I believe they experience all of those.

Hmm...would that explain the CPU performance loss of an aging cell phone battery? Lower discharge efficiency = less power available for the CPU = CPU throttles itself to lower power usage?

That is exactly what happened, yes. Without the throttling, the battery can't deliver peak power, and the device crashes.

We are missing mostly production capacity. Also - what is the longevity of the battety? It may break even in two years time but if cells need to be recycled at the fourth year it may not be as good as it looks like.

My car is almost four years old and its battery has lost about 1% capacity. These things don’t wear out that quickly.

> My car is almost four years old and its battery has lost about 1% capacity. These things don’t wear out that quickly.

Probably because Tesla undersells their batteries. During hurricanes or other disasters Tesla routinely unlocks the software limit, allowing customers more range (https://www.teslarati.com/tesla-unlocks-full-battery-capacit...).

It's the same with HDDs and SSDs, which always carry a decent safety margin to account for media wear.

Only certain models are software limited, and the 85 isn’t one of those. They actually substantially overstated the capacity: the 85 means 85kWh, but the actual usable capacity is only about 77.5kWh. (https://electrek.co/2016/12/14/tesla-battery-capacity/)

The SoC window is not 0 to 100%, it's might be eg. 15 - 75 % or something. That's also why you don't notice battery degradation, since the window might be moving (keeping constant energy limits for 0 and 100% charged).

For kWh capacity it's just a matter of counting the cells. Actual kWh will vary abit by measuring technique but I assume there is a way to drain the nominal Wh:s from them.

That is good to hear as I typically only consider used cars and other than range, concerns about how the battery capacity holds up long term have kept me from really considering EVs. What do you drive? Tesla? Leaf? Something else?

It’s a Model S 85 with not quite 60,000 miles. From what I hear from other owners, this is slightly better than average but not much. I haven’t done anything special to treat it well, either. I charge it to 90% nightly (the default), charge to 100% before long trips, and have used Superchargers for maybe 20% of those miles.

Not sure what the parent drives but there are a number of variables to consider, for example with Tesla supercharing often will degrade the battery faster as will charing it in trip mode for the same number of miles driven, but there is a good amount of data out there for this car.


"But, overall, the data offer some basis for confidence that a Tesla Model S will lose—on average—less than 15 percent of its battery capacity over the average 150,000-mile (250,000-km) life of a vehicle."

I have a 2011 volt and have had negligible degradation. Thats an N of 1 but from GMs data, degradation hasn't been an issue in volts.

Tesla gives their powerpacks a 10 year full warranty but projects a 15 year lifespan.

Even if it is scrapped after four years, if it keeps generating this kind of savings for that period, it’s still a 600% return on capital. Turning $40MM today to $240MM 4 years from now is a deal any business would take in a heartbeat.

I think your maths is off.

$40m * 4 = $160m

$240m / $40m = 6 years

Edit: Mixed up cost and income?

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