- According to current and recent employees talking to CNBC, Tesla is developing the means to manufacture its own batteries at scale.
- In-house cells would allow Tesla to optimise its battery-packs for its cars and could enable them to cut costs.
Analysis and Comments
- Tesla making its own cells would fit with Musk’s general ambition to make Tesla as vertically integrated as possible, and falls in line with his acknowledgement of the company having been “battery-constrained” in the past.
- The news also comes after Tesla’s acquisition of battery maker Maxwell Technologies earlier this month and reports of the company talking to Chinese EV battery makers.
- Tesla is not alone in eyeing the battery manufacturing space: while BMW has continued to express reservations about making their own batteries, VW is investing in a battery cell factory in Germany, and Toyota is working with Panasonic to build a battery JV next year.
- Some degree of pricing power is likely to return to the cell manufacturers. This is a risk for the automotive OEMs which are banking on continued commoditization of the industry so that battery pack costs fall below $100/kWh.
- In my view, they may be disappointed, as I think battery pack costs could potentially find a mid term floor at c. $140/kWh, with commodity price hikes and margin improvement for cell manufacturers being the two major risks for battery costs.