Musk raises expectations for Tesla with more bold statements

Following the forays of established automakers into the electric vehicle industry, with the possible exception of BMW, is largely unexciting. New developments are occurring all the time, of course, but for some reason the auto industry’s big players don’t inspire much great hope that electric vehicles will make a significant dent on overall sales anytime soon.

Then there is Tesla Motors. Whenever news in the larger electric vehicle industry is uninspiring, Tesla always remains a beacon of hope for the future. No automaker in the electric vehicle sector has the ambition or vision of Tesla, and most don’t execute their EV plans as well as Elon Musk’s crew.

Much of that ambition, vision, and execution is a reflection of the company’s leader. Musk has an irrepressible drive and enthusiasm for ridding the transportation sector of carbon-based energy sources and an intellect that few (if any) auto executives can match. He is also well-known for his perfectionism, on display with the delayed launch of Model X in part because Musk’s need for perfection is so hard to satisfy.

Does Tesla have a future ace in the hole?

In Thursday’s conference call after the release of Tesla’s quarterly earnings, Musk put forth the expected rhetoric concerning the Gigafactory, launch of Model X, inferiority of hydrogen fuel cells, etc. But a couple comments in particular stood out to attentive observers.

First, the most cryptic statement: when asked about R&D and capital expenditures, Musk answered suggestively. "In the past we've shown all of our cards, so people have kind of gotten used to us showing all of our cards. We’re not currently showing all our cards."

Of course, this isn’t necessarily an indication that Tesla is planning something epic. But it is a comment that cannot be ignored coming from Musk; Tesla has never been shy about revealing even its boldest future plans, so the implication that the company has something up its sleeve could be an important one.

It could be related to ultra-fast charging technology, stationary energy storage, autonomy, or other advancements in batteries or supercapacitors. It could amount to nothing of consequence. It could be anything, really. With Musk and Tesla on a different level than the other automakers, nothing is off-limits; that is what makes comments like these intriguing to those following the EV industry.

$100/kWh in ten years?

With electric vehicles, battery costs are the biggest obstacle in terms of cost. To bring EVs on par with legacy gasoline vehicles, conventional wisdom suggest battery costs will need to fall below $200/kWh. With Tesla’s Gigafactory and the expected resulting 30% cost reduction, the company will likely reach that mark in 2017 – this will allow the Model III to legitimately compete in price with vehicles such as the BMW 3-series.

Last week, though, Musk indicated that $200/kWh is by no means the ceiling (or floor, as it were.) The CEO said in the conference call that he would be “disappointed if it took us ten years to get to a $100/kWh pack.”

The implications of $100/kWh batteries are phenomenal. Not only would electric vehicles be cost-competitive with gasoline counterparts, the stationary storage industry would explode in support of solar and wind power. Time will tell if other automakers are capable of reaching this number, but I wouldn’t bet against Musk.

Model III will have improved energy density

Another comment by CTO J.B. Straubel provided confirmation that Model III, due to launch in parallel with the Gigafactory in 2017, will achieve 200 miles of range for a price tag in the mid-$30,000s in part due to improved battery technology.

“The cathode and anode materials themselves are next generation, so I mean we’re seeing improvements in the maybe 10% to 15% range on the chemistry itself,” said Straubel in reference to the improved energy density of the cells to be used in Model III packs.

This improvement is in line with the broad trend in lithium-ion battery technology of incremental improvements – it should have been expected that the next generation battery, launching five years after the original Model S pack, would offer superior energy density.

A Model S fitted with a 60-kWh next-generation pack with this improved energy density would theoretically achieve 230-240 miles of range compared to the current 208 miles. It also means that Tesla will be able to use a smaller pack to achieve the targeted 200 miles of range for Model III, allowing the price to drop into the “attainable” range.

What it means

It will be some time before we will know if these statements made by Musk will amount to anything significant. Vague comments about a company’s future potential can be made simply to give the illusion of innovation and appease investors, but that isn’t Musk’s style. Tesla still has a few tricks up its sleeve, and it will be fun to watch as they are revealed in the coming years.