Tesla’s cobalt-light batteries seen providing cost advantage

Tesla Inc.’s lead in battery technology gives it a cost advantage that may last for several years and help the electric-car maker face down an onslaught of new competition, according to new research from Bloomberg New Energy Finance.

Batteries made by the U.S. manufacturer and its Japanese partner, Panasonic Corp., require less cobalt, the metal whose price has shot up with demand for electric cars. CEO Elon Musk on June 5 said Tesla is targeting a cell level price of $100 per kilowatt-hour in 2018 and battery pack costs below that level within two years. BNEF doesn’t expect average pack prices to drop below $100 until 2025.

“If Tesla reaches its pack-price milestone, it will be several years ahead of our industry benchmark,” BNEF said in the report. The researchers noted that others made batteries for as low as $120 per kilowatt hour in 2017, “which suggests that Tesla is not alone in being ahead of the curve.”

Tesla hasn’t been able to extend its U.S. dominance in electric cars to other regions, and is now under threat from new models coming from European rivals such Volkswagen, Daimler, Volvo and BMW. The competition will be toughest in the utility segment, where the Model X goes up against new models from Jaguar Land Rover’s I-Pace, Audi’s coming e-tron and the Hyundai Kona, due in 2019.

Daimler’s Mercedes-Benz unveiled its EQC crossover on Tuesday in Stockholm, part of a plan to invest at least 10 billion euros ($11.6 billion) to develop a range of electric vehicles.

With expanded consumer choice, competition will focus not just on the availability of electric cars, “but by more prosaic issues such as price, build quality, aftermarket services and user experience,” the report said. “If Tesla is to maintain its early leadership in the EV industry, it may have some ground to catch up in these areas against the established automakers.”

By contrast, Tesla and China’s BYD Co. are the only two vertically integrated electric-car makers, “which may confer a long-term advantage if battery technology becomes a major differentiator,” the report said.



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