3 Battery Alleyways Elon & JB Used To Give Big Auto & OPEC Nightmares

July 30th, 2016 by Zachary Shahan

Batman had Robin, Sherlock Holmes had Watson, Napoleon Dynamite had Pedro, Wayne had Garth, and Beavis had Butthead — heroes do best with an awesome sidekick. A lot of praise for Tesla Motors goes straight to Elon Musk, but I think it’s safe to say that Tesla wouldn’t be what it is, wouldn’t have accomplished what it has accomplished, and probably wouldn’t have even survived if it hadn’t been for Mr. JB Straubel.

I was thinking about some battery naysaying the other day (actually, weeks ago, as this draft has been open and waiting for me for weeks), which got me to thinking about how EV batteries made a big leap forward. Naturally, that quickly got me thinking about what Elon & JB have done to bring electric cars into the mainstream. Three overall, critical keys to the improvement of these batteries (in terms of performance for cost) popped out, in response to two key statements of skepticism.

Battery price trend chart by Nykvist et al. (2015), with modification by me to add the latest Tesla battery price statement.

It’s The Pack, Man!

As I discussed in a recent article I wrote about BMW+Samsung batteries vs Tesla+Panasonic batteries, there has long been a misconception that Tesla’s batteries are exactly the same as laptop batteries. (They aren’t — not even counting the dramatically updated ones Gigafactory 1 will produce.) But separating the cells from the packs and assuming all the magic is done at the cell level misses a critical point about Tesla’s battery leadership and competitive advantage.

I’ve seen it written many times (in slightly different words) that “any large automaker can put some battery cells into a car and run Tesla out of the market.” We have a battery expert on staff who competed (against Tesla) in the Automotive X prize — he’s one of the people most in awe and congratulatory about what Tesla has done on the battery front. He has made it clear to me that a lot of the genius and superior competitiveness of Tesla’s batteries is in the pack design. For more details on specific differences in battery packs, I recommend his piece titled “A Tale of 3 Battery Packs,” which contrasted some aspects of the Chevy Volt, Nissan LEAF, and Tesla Model S battery packs.

As discussed (primarily by another battery expert I know) in the recent BMW+Samsung vs Tesla+Panasonic article, battery cells have various tradeoffs to consider (between cost, power capacity, energy capacity, lifespan, etc.), and the cells Tesla uses are very different than the cells used in other electric car battery packs. But that isn’t only because Tesla took a different approach to evaluating which battery cells would be best for an EV — that’s also because the Tesla team, led by JB Straubel, has carefully designed the battery pack to accommodate and get the most out of the chosen battery cells. And this pack leadership (alongside Tesla’s growing cell leadership) definitely puts Tesla a huge step ahead of most electric car manufacturers, imho.

A Water Bottle Is Only As Useful As The Water Inside

That’s probably not my best literary line, but the point is: it’s not the pack, man, it’s the cell! Obviously, I just argued for the importance of the pack design, but when it comes down to it, the cell is what provides the power and energy (unless my mundane knowledge of batteries has led me astray).

Opening the Gigafactory this week, Don Elon and Sancho Straubel (h/t MaartenV-nl and Miguel de Cervantes) focused concisely but strongly on the importance of the battery cell, which is transitioning to a “21-70” cell instead of an “18650” cell.

Sancho Straubel: “We’ve spent a lot of time on this actually. It’s kind of interesting. There are a bunch of tradeoffs. There are some things that get better when you make the cell size bigger, and some things that get worse. 18650 was sort of an accident of history. That was what was standardized for early products. So we revisited all of those trade offs and came to this size, which is quite a bit bigger. If you have them next to each other, the actual volume of materials inside is substantially more. And overall it’s about cost optimization.”

Don Elon: “It really comes from the first principles of physics and economics. That’s the way we try to analyze everything. To say like if no cell existed in the world, what size should it be? What is the size that would achieve the product characteristics we’re looking for, but would be fundamentally optimal? 18650 is not optimal.”

Chart by McKinsey, with modification by me in red text.

Tesla has highly optimized its battery cells for electric cars (and trucks, buses, etc.) — to think otherwise and not see the competitive advantage in Tesla’s work is to turn a blind eye to probably the “most important” component of an EV. (I know, cupholders are important too, but let’s just chill out a little bit about those — or go shop around EV Annex.)

Making Mountains

As Elon has highlighted, he believes there’s more progress to be made by jumping into and improving mass manufacturing than via R&D in the lab. He has highlighted this as a difference in philosophy between Tesla and Google. From his most recent public comments:

“The factory itself is considered to be a product. The factory is the machine that builds the machine. It actually deserves more attention from creative and problem solving engineers than the product it makes. What we’re seeing, if we take a creative engineer and apply them to designing the machine that makes the machine, they can make 5 times as much headway per hour, than if they work on the product itself.”

Economies of scale go a long way, as does thinking with a “first principles” philosophy as much as possible. The Gigafactory is both — on steroids (but good steroids).

Getting back to Sancho Straubel, I’ve found it interesting on quarterly conference calls that Elon often asks JB to talk about the details of the Gigafactory. Basically, as I’m reading it, this is JB’s baby even more than it’s Elon’s baby (how it’s the baby of both of them is, again, a story for another day). For sure, Elon’s heavily involved in raising it, but to ignore JB’s role in the Gigafactory would be to ignore the Earth’s role in “the Sun going to sleep” every night.

Together, JB & Elon are making giant strides in battery production, manufacturing, and what it means to dream big. No matter what your company’s name is, building a Gigafactory doesn’t happen overnight, and competing well in the electric car market doesn’t happen without building a Gigafactory (or, perhaps, a network of somewhat smaller battery factories around the world). Volkswagen may be starting on this, Kreisel may be aiming for it, LG Chem may want to surprise us someday, but it’s hard to see how one can come to the conclusion that Tesla isn’t growing its lead by the day. The new stats regarding Gigafactory 1 are mind-boggling, essentially impossible to comprehend, imho.

The gasoline car market goes down the drain with expensive oil. The electric car market explodes with cheap batteries. But what if only one or a few companies have cheap batteries for several years?

It’s fun for anyone to go visit a mountain, but creating mountains is a power that can put you in the history books.

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