Posted on 05/26/2015 9:35:12 PM PDT by ckilmer
Tesla Motors Inc (NASDAQ:TSLA) is leading the way in electric vehicle technology, especially in batteries, and this is a good time to be in Tesla’s position. Goldman Sachs Group Inc (NYSE:GS) estimates that “electrified vehicles” will be one-quarter of the car sales in the world in the next ten years. The analysts define “electrified vehicles” as those with an electric powertrain, which include not only EVs but also hybrids and fuel cell vehicles.
Tesla is taking one of the first and most important steps in advancing “electrified” vehicle technology, and that’s ramping up battery production.
Goldman Sachs analysts released Volume 1 of their “Cars 2025: A disruptive new era of the Automotive Age.” In it, they discuss the shift that’s happening within the auto industry, seven “megatrends” they see unfolding and why it’s more urgent than ever that the industry embraces new technologies. Here are the seven megatrends they see as being essential over the next several years in the auto industry. (All charts/ graphs in this article are courtesy Goldman Sachs.)
Unsurprisingly, they believe electric vehicles play a major role in the future of the automotive industry. It’s understandable why many analysts remain bearish on EVs, however, as the Goldman team notes that the penetration rate is far below what Nissan Motor Co., Ltd. (ADR) (OTCMKTS:NSANY) (TYO:7201) and other automakers were expecting five years ago.
Electric vehicles have a major advantage over those with internal combustion engines. They have a third as many parts as their gas-powered counterparts.
However, this advantage also comes with one big disadvantage, at least for now. Battery costs and durability and lengthy charging times are a huge barrier to adoption. As time goes on though, Tesla and others, possibly even Apple Inc. (NASDAQ:AAPL), are going to drive more innovations forward. Battery makers, including MMC and AESC, are reporting that by 2018, lithium-ion batteries will likely have double the energy density of what they do now.
A big part of advancements in battery technology is production capacity, and Tesla aims to fix this issue with its $5 billion gigafactory. The Goldman Sachs team believes the facility will be an important turning point in the next five to ten years. Panasonic Corporation (ADR) (OTCMKTS:PCRFY) (TYO:6752) is partnering with the EV manufacturer and intends to invest by paying for between 30% and 40% of the production equipment for the facility.
By 2020, Tesla expects the factory’s capacity to be 50 GWh per year, which the Goldman team said is the same capacity as three-and-a-half standard nuclear power plants. The automaker expects to be able to produce half a million Tesla vehicles with 35 GWh. The other 15 GWh is expected to be used for the home and business energy storage systems Tesla unveiled last month.
Together, Panasonic and Tesla expect to be able to slash battery costs by approximately 30% to 40% after production at the gigafactory is fully ramped. The Goldman Sachs team expects the price per watt-hour for EV batteries to be cut in half within the next ten years.
The Japanese government expects that in the next five years, there will be high demand for EVs with a range of 250 to 300 kilometers and that the price per watt-hour will be about 50 cents. The analysts think these milestones could be reached three years earlier, however, because of how many battery suppliers there are in Japan
Down the road, EVs are expected to become more affordable and hit the mass market, but probably not until the late 2020s using this same roadmap, according to the Goldman Sachs team.
Unfortunately this projection throws cold water on Tesla’s goal to have a mass market “affordable EV out in the next few years. But then again, if Tesla could achieve this milestone before any other automaker, it would have a significant lead over all of its competitors, just as it has now in terms of battery technology and EV range.
Yes, of course. The efficiency of the use can vary considerably.
It works remarkably efficient for locomotives. I do not know for sure, but its efficiency gains may come as weight increases. Think trucks hauling loads, vehicles pulling trailers and MINIVANS. There is your hint.
Yes, of course. The efficiency of the use can vary considerably.
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Sow how does the efficiency of an internal combustion engine running on gas compare to an electric motor running off a battery?
In the US, the electric motor running off a battery mostly gets the electricity from a combustion engine turning a generator. Thus, it is most useful to follow the efficiency of the entire process of generating the electricity, not just the final use of electricity from a battery.
Even if you look at only the battery power from your electric outlet in your home, there are inefficiencies in charging the battery, not using the battery for some time, and discharging the battery. The motor itself likely runs at about 95 percent efficiency.
An IC engine powered vehicle is much less efficient than that. A rule of thumb is that a third of the power is lost in heat, and another third is lost in mechanical efficiency, leaving just a third to propel the vehicle. However, the electric vehicle also has losses in the powertrain which can approach the one third in the IC vehicle. It also must heat and air condition the vehicle, while heating is free in the IC vehicle. The battery must also provide lighting, battery and motor cooling and other electrical loads in the vehicle which decreases the efficiency more.
It works remarkably efficient for locomotives. I do not know for sure, but its efficiency gains may come as weight increases. Think trucks hauling loads, vehicles pulling trailers and MINIVANS. There is your hint.
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Too bad this could not be installed in minivans. My brother drives Amish around in 16 people step vans. Lower fuel costs are always helpful. But this would be too cost prohibitive and hard to maintain for an installation.
No, it will debut in minivans.
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