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Tesla Says Model S Profitible At Low Volumes

Posted in auto industry, Cars, Chevrolet, Electric Cars, Newsworthy, Nissan, Tesla by Kurt Ernst | January 3rd, 2011 | Leave a Reply |

Tesla's Model S Sedan. Photo: Mark Warren

It costs a lot of money to design and implement new propulsion systems. If you count the EV-1, General Motors has been working (intermittently) on electric car technology since 1990, which is a lot of R&D hours burned. When government subsidies for electric vehicles go away, Nissan will need to sell some 500,000 Leafs each year to recover the development cost and turn a profit. Much of the expense associated with both the Chevy Volt and the Nissan Leaf comes for their batteries: both Chevy and Nissan use custom built lithium-ion battery packs, which undergo an extensive amount of testing to ensure cell optimization prior to assembly.

Tesla, on the other hand, projects that the Model S sedan will turn a profit with a sales volume of just 20,000 units annually. This is partially due to the fact that the Model S borrows heavily from propulsion technology developed for the yet-to-be-profitable Tesla Roadster. It’s also due to the fact that Tesla uses off-the shelf lithium ion batteries in building their battery packs, instead of devoting resource to building custom battery packs. Similar lithium ion cells are used in laptop batteries, and these smaller cells cost about seventy-five percent less than the cells used by GM and Nissan.

Maybe the sheer volume of smaller cells used by Tesla negates problems caused by a few being out of spec, and perhaps the battery assembly in the Tesla Model S will be more serviceable than the battery pack in the Chevy Volt. Still, it’s hard for me to imagine that much of a cost saving without some kind of performance penalty. I guess we’ll know for sure when the Tesla Model S finally does hit production.

Source: Left Lane News

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