CNBC's Phil LeBeau details new, exclusive data on Tesla that may shine a light on why the company is performing so well. Tesla’s experience in building electric vehicle battery packs is helping the electric car company extend its lead over other automakers, according to a new report.
Cairn Energy Research Advisors, a consulting firm specializing in electric vehicle battery research, says the cost of a cylindrical cell battery pack dropped to $158.27 per kilowatt-hour last year, down by more than $100 per kWh from four years ago.
Tesla is the only automaker to use cylindrical battery cells in its battery packs. Other automakers use battery packs that include pouch or prismatic battery cells. Those battery packs cost, on average, more than $200 per kWh in 2019, according to Cairn.
“Tesla simply has been engineering these packs longer than its competitors, and therefore it has a technology lead that is significant,” said Sam Jaffe, Cairn’s managing director.
Tesla’s Gigafactory
Jaffe says Tesla has two advantages that make it the industry leader in EV battery costs: More advanced engineering and the massive Gigafactory where it manufactures battery packs. Tesla’s engineering advantage, according to Jaffe, is the automaker’s use of more advanced cylindrical battery cells and its battery management system, the software that controls a vehicle battery pack.
“Tesla has really revolutionized that part of the battery pack and made it much more sophisticated, and it gives them the competitive advantage,” said Jaffe.
Meanwhile, Tesla’s Gigafactory in Sparks, Nevada, gives CEO Elon Musk the size and scale to further drive down costs. Last year, the Gigafactory manufactured battery packs to power more than 365,000 new Tesla vehicles, with most of them for Model 3.
During Tesla’s fourth-quarter earnings call with analysts Musk talked about the push to increase output from the Gigafactory. “We have got to really make sure we get a very steep ramp in battery production and continue to improve the cost per kilowatt-hour of the batteries,” he said.
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