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.
Disadvantages? How about the real choice most EV drivers will always have to evaluate - in slow or stalled traffic in the winter, you can choose locomotion or warmth. Likewise in the south in summer, you can have your movement or your AC. Something’s got to give.
Exhibit 38 only shows 2 of 3 critical factors.
Not only do battery cars need to go 700 kilometers and weight 40 kilograms, they need to recharge in under 5 minutes
Also it's curious that in the Exhibit 36 EVs, probably by magic, do not require "auto body", "suspension and braking", and "others" (like headlights, radio, and windshield wipers, I guess.) None of that stuff is needed in an EV. It consists only of four electric motors, a steering wheel, and an electric inverter to run those motors. I'm not sure if one can build even a lawnmower out of that set, let alone a vehicle for humans.
I take it that Goldman-Sachs will be the first to buy up all the short positions when this factory is completed and is found to be way over the capacity necessary for the demand.
And what is the battery cost/vehicle cost in REAL money, not whatever that gibberish is in Exhibit 38??? ;)
I’ll take a high performance diesel, thank you very much.
If Musk weren’t a hero to the lefties this factory would NEVER be built in the USA.
Exhibit 36 is a classic apples/oranges comparison.
They are dishonestly comparing today’s standard-sized all-purpose gas vehicle with a bare-bones lifestyle-limiting electric microcar.
Do the taxpayers own that factory?
I would too, unfortunately, the really good ones have been banned from import. At least, the last time I checked. I keep telling my husband I want an old diesel, import. I would settle for an old military diesel truck.
A friend of a friend is in town from California with his Tesla, and there’s going to be a “ribbon cutting” ceremony for the new charging stations at our local hotel. I’m going to go check it out, and peek at the car.
I”m hearing amazing stories about the car, like how it reads speed limit signs and auto-corrects the cruise while displaying the speed limit sign on the dash, optical sensors notice when you approach the center line, and rumble the steering wheel. adjustable height suspension, back camera in the center console, etc. Sounds like an amazing vehicle that will only go 255 miles per charge.... for $120,000. There’s an $80,000 version, and they’re working on a $40,000 version.
I’d like all that fancy gear in a regular car as well. I wonder how much one’s electric bill would rise if they had to charge up every day.
Good news for the coal industry!
Green Cars For The Masses!
It looks like a white elephant to me.
A Tesla with a 85 kwh battery would cost ~$8.50 if electricity is 10 cents a kwh. You also have to spend a couple grand to upgrade electrical service to the garage for faster charging times.
Chevy volts are not selling well either, join the club.
The only good thing I see coming from that fiasco is there are a lot of jobs being created.
From what I’ve read, people who own Teslas or have ridden in one really like them.
If Musk weren’t a hero to the lefties this factory would NEVER be built in the USA.
...
Really? There were multiple states competing for that factory, some of them not known for being havens for lefties.
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