Tesla’s smart battery strategy in China

Once again Tesla is showing what’s the smartest strategy to achieve the massification of electric cars. In China Tesla will use two very different battery chemistries for the Model 3. One to give the lowest cost/higher availability and another to give the best range.

In this article we’ll see why Tesla’s new battery strategy will probably be adopted by other automakers.

 

Warning

This is the kind of article I like to write, it will be long…

 

Let’s start by differentiating the most popular battery chemistries today, to understand Tesla’s choice.

 

Anodes

LTO anodes are usually combined with NCM cathodes. They are better suited for ESS (Energy Storage Systems), since they contribute to make the batteries large, heavy and expensive. However, they are extremely safe and durable.

 

Lithium Titanate Oxide (LTO)

• Energy density: (★) 1/5
• Power density: (★★★★★) 5/5
• Cycle life: (★★★★★) 5/5
• Safety: (★★★★★) 5/5
• Cost: (★) 1/5

 

Cathodes

For electric cars the focus has been on improving the cathodes. They are usually paired with graphite anodes, but more recently a mixture of graphite with silicon has been used to achieve higher energy density. However, the use of silicon comes at the cost of reducing cycle life, due to swelling of the anode.

 

Lithium Ferro Phosphate (LFP)

• Energy density: (★★) 2/5
• Power density: (★★★★) 4/5
• Cycle life: (★★★★) 4/5
• Safety: (★★★★★) 5/5
• Cost: (★★★★★) 5/5

 

Lithium Ferro Manganese Phosphate (LFMP)

• Energy density: (★★★) 3/5
• Power density: (★★★★) 4/5
• Cycle life: (★★★) 3/5
• Safety: (★★★★★) 5/5
• Cost: (★★★★) 4/5

 

Lithium Nickel Cobalt Manganese (NCM 333 or 111)

• Energy density: (★★★) 3/5
• Power density: (★★★) 3/5
• Cycle life: (★★★★) 4/5
• Safety: (★★★★) 4/5
• Cost: (★★) 2/5

 

Lithium Nickel Cobalt Manganese (NCM 523)

• Energy density: (★★★★) 4/5
• Power density: (★★★) 3/5
• Cycle life: (★★★) 3/5
• Safety: (★★★) 3/5
• Cost: (★★★) 3/5

 

Lithium Nickel Cobalt Manganese (NCM 622)

• Energy density: (★★★★) 4/5
• Power density: (★★★) 3/5
• Cycle life: (★★★) 3/5
• Safety: (★★★) 3/5
• Cost: (★★★) 3/5

 

Lithium Nickel Cobalt Manganese (NCM 712)

• Energy density: (★★★★★) 5/5
• Power density: (★★) 2/5
• Cycle life: (★★) 2/5
• Safety: (★★) 2/5
• Cost: (★★★★) 4/5

 

Lithium Nickel Cobalt Manganese (NCM 811)

• Energy density: (★★★★★) 5/5
• Power density: (★★) 2/5
• Cycle life: (★★) 2/5
• Safety: (★★) 2/5
• Cost: (★★★★) 4/5

 

Lithium Nickel Cobalt Aluminium (NCA)

• Energy density: (★★★★★) 5/5
• Power density: (★★★) 3/5
• Cycle life: (★★★) 3/5
• Safety: (★★) 2/5
• Cost: (★★★★) 4/5

 

Now that you know the main advantages and disadvantages of the most popular battery chemistries it’s easy to guess which ones Tesla chose for different purposes…

 

Tesla Model 3 Standard Range

For the standard range Model 3 in China, Tesla will use LFP or LFMP battery cells from CATL. Not only these battery cells don’t require cobalt – meaning lower cost and higher availability -, they also don’t require a very complex TMS (Thermal Management System), since they are very safe.

 

Now, let’s see what to expect…

 

With LFP battery cells Tesla can put in the Model 3 a 50 kWh battery for 4.000 euros that handles 4.000 complete charge/discharge cycles before reaching the EoL (End of Life). EoL is reached when the battery only retains 80 % of its initial capacity. This means that if when new the Tesla Model 3 Standard Range had an average range of 300 km, after 4.000 cycles and 1.080.000 km [(300 + 240) / 2 x 4.000] the range would still be 240 km.

 

Hypothetical Tesla Model 3 LFP battery

• Cost: 4.000 euros
• Capacity: 50 kWh
• Range: 300 km when new, 240 km after 1.080.000 km

 

Tesla Model 3 Long Range

For the long range Model 3 in China, Tesla will use a high nickel-content chemistry (NCM 712, NCM 811 or NCA), probably from LG Chem. These battery cells offer the best energy density, which allows a higher range. However, they still require some cobalt, which makes them more expensive and with lower availability.

 

Now, let’s see what to expect…

 

NCM 811 battery cells

• Gravimetric energy density: 300 Wh/kg (50 % more than LFP)
• Volumetric energy density: 700 Wh/L (68 % more than LFP)
• Cycle life: 1.000 cycles
• Cost at pack level: 100 euros per kWh

Examples:

• Zenlabs
• Envision AESC
• CATL

 

With NCM 811 battery cells Tesla can put in the Model 3 a 75 kWh battery for 7.500 euros that handles 1.000 complete charge/discharge cycles before reaching the EoL (End of Life). EoL is reached when the battery only retains 80 % of its initial capacity. This means that if when new the Tesla Model 3 Long Range had an average range of 450 km, after 1.000 cycles and 405.000 km [(450 + 360) / 2 x 1.000] the range would still be 360 km.

 

Hypothetical Tesla Model 3 NCM 811 battery

• Cost: 7.500 euros
• Capacity: 75 kWh
• Range: 450 km when new, 360 km after 405.000 km

 

As you can see, using two different battery chemistries allows Tesla to offer its customers the choice between the best range and the best cost. Moreover, using different suppliers and raw materials makes Tesla less prone to have battery production capacity problems. This strategy should be adopted by every automaker. Being tied to limited suppliers and/or raw materials isn’t very wise.

 

Nissan

Currently the Nissan LEAF is available to order with two different battery packs, but both use the exact same Envision AESC cells. The 40 kWh battery pack is made with 192 (96s2p) NCM 523 battery cells, while the 62 kWh pack is made with 288 cells (96s3p). Later this year, Nissan is expected to upgrade to NCM 811 battery cells.

 

Volkswagen

The Volkswagen ID.3 will be offered with three different battery capacities, the mid range version will use NCM 622 battery cells, while the long range version will use the NCM 811 type. There’s a chance that the standard range version will use LFP cells, but so far it’s only an unconfirmed possibility… It would be great to have at least one battery pack option built with cobalt-free cells, which are made with abundant raw materials – making them cheap and highly available to boost production.

The entry-level version of the ID.3 is expected to arrive next year and will cost less than 30.000 euros. With a 48 kWh (45 kWh usable) battery it gets a WLTP range of 330 km. If Volkswagen does put a LFP battery from CATL in it, it’ll be highly profitable and I expect the production capacity to be very high (could surpass the Tesla Model 3).

 

 

Nonetheless, already this year, even with still requiring some cobalt in their battery cells, Volkswagen expects to achieve a kWh cost below 100 euros (at the pack level), which is very good and probably only second to Tesla.

 

Summing up, until we have the ultimate battery (high energy density made with abundant raw materials) every electric car should be offered with two different battery packs. One made with abundant and cheap raw materials to offer the best cost and availability, and another more energy dense battery pack to offer the best range with a higher cost and limited production.

For example, with this strategy my favorite electric supermini, the Renault ZOE could be available with a 40 kWh LFP battery and a 60 kWh NCM 811 battery. With a 40 kWh LFP battery the ZOE would not only cost Renault less to produce than its gas-counterpart (the Clio), it could also reach the same production levels since the raw materials are abundant.

 

Hypothetical Renault ZOE LFP battery

• Cost: 3.200 euros (3.840 euros with a 20 % profit margin)
• Capacity: 40 kWh
• WLTP range: 300 km when new, 240 km after 1.080.000 km

 

Thanks to its excellent cycle life, this battery option would be perfect to use with Vehicle-to-Grid (V2G) technology. Actually, it might be the only battery chemistry that finally makes V2G rational to implement.

 

Hypothetical Renault ZOE NCM 811 battery

• Cost: 6.000 euros (8.400 euros with a 40 % profit margin)
• Capacity: 60 kWh
• WLTP range: 450 km when new, 360 km after 405.000 km

 

The more energy dense battery should be considered a premium option and sold with a higher profit margin.

 

I’m looking forward to see which automaker will be the first to make its electric cars available with a cobalt-free battery pack option in Europe or North America. My guess is one that already has ties with CATL, so probably Tesla, Volkswagen or PSA. What do you think?

 

 

More info:

https://www.reuters.com/article/us-tesla-china-electric-exclusive/exclusive-tesla-in-talks-to-use-catls-cobalt-free-batteries-in-china-made-cars-sources-idUSKBN20C0RP

https://cleantechnica.com/2020/02/18/tesla-shanghai-model-3-may-go-cobalt-free-using-catls-lfp-cells-diving-deeper/

https://insideevs.com/news/400255/mic-tesla-model-3-prismatic-lfp-cells/