Tesla Already Has a "Million-Mile" Battery

Million-Mile Batteries

An automotive battery capable of lasting for one million miles or more has been widely expected to be introduced by Tesla  (TSLA)  at their upcoming Battery Day in September. Those expectations have been stoked by a number of recent media reports and published research from Jeff Dahn's battery research team, who operate in partnership with Tesla. Whispers escalated in mid-May, when Reuters reported on Tesla's battery developments

“Electric car maker Tesla Inc plans to introduce a new low-cost, long-life battery in its Model 3 sedan in China later this year or early next that it expects will bring the cost of electric vehicles in line with gasoline models, and allow EV batteries to have second and third lives in the electric power grid." - Reuters, May 14th

The report continued, specifically noting the goal of a million-mile battery.

“The new 'million mile' battery at the center of Tesla’s strategy was jointly developed with China’s Contemporary Amperex Technology Ltd (CATL) and deploys technology developed by Tesla in collaboration with a team of academic battery experts recruited by Musk, three people familiar with the effort said.” - Reuters, May 14th

For long-time followers of Tesla, the concept of a million mile battery, and powertrain, is not new. Tesla has aspired to produce vehicles that can last more than one million miles for at least five years. Tesla CEO Elon Musk mentioned the concept in a 2015 blog post about the rollout of Tesla's Ludicrous Mode feature.

“While working on our goal of making the power train last a million miles, we came up with the idea for an advanced smart fuse for the battery.” - Elon Musk

Since then, Musk has occasionally mentioned the idea on earnings calls or in other discussions. Aside from some additional details, Reuters' report on Tesla's million-mile ambitions was therefore unsurprising.

Where some confusion set in, however, was in early June when Bloomberg reported on comments from CATL’s chairman Zeng Yuqun. Bloomberg wrote that CATL was "ready to produce a battery that lasts 16 years and 2 million kilometers (1.24 million miles)" according to an interview with CATL Chairman Zeng Yuqun. The Chairman said that the million-mile CATL battery was available for order.

"If someone places an order, we are ready to produce." - Zeng Yuqun, CATL Chairman

So Reuters had reported in mid-May that the "new 'million mile' battery at the center of Tesla’s strategy was jointly developed with [CATL]," and now, just weeks later, CATL was announcing market availability of a million-mile battery? Had Tesla's postponement of their Battery Day caused them to be beaten to the punch? Not exactly.

It's All in the Details

The number of cycles a battery can maintain reasonable performance through is just one characteristic of a battery's design. Many factors determine how viable a battery is for use in an electric vehicle.

• Cost per kWh
• Scale of production
• Production efficiency
• Chemistry
• Material cost
• Material availability and sourcing
• Recyclability
• Energy density
• Volumetric
• Gravimetric
• Power
• Charge rate
• Stability / Safety
• Lifecycle
• Number of cycles
• Degradation

CATL disclosed lifecycle and information on relative cost, but not much else. If lifecycle is the only consideration, Tesla already has batteries capable of powering a million-mile electric vehicle. This detail was disclosed in Tesla's 2019 Impact Report.

In the report, Tesla examines the well-to-wheel emissions, including manufacturing, generated by various vehicles and use cases. This is done on a per-mile basis, amortizing the manufacturing emissions over the lifetime utility of the vehicle.

Tesla estimates the average mid-size premium internal combustion engine sedan travels ~200,000 miles over its lifespan and assumes the same for a Model 3 used for personal use. However, Tesla also shows emissions for a ride-sharing use case in which they assume ~1,000,000 miles of use. 

All else being equal, that would reduce the per-mile emissions from manufacturing by 80%. However, not all is equal because a million-mile battery may be more emissions-demanding to produce. Therefore, we need to know what million-mile battery Tesla is using in this analysis, and sure enough, Tesla shares this information.

"[The lifecycle analysis shows] what emissions per mile could be if the Model 3 were used for ridesharing over one million miles using cell chemistry from our energy products" - Tesla, emphasis added

This statement confirms that if Tesla were to utilize the battery technology used in their energy products, the lifecycle would support more than one million miles for the Model 3. Tesla investor relations confirmed this interpretation.

"[As] we write in the Impact Report when we talk about 'ridesharing use', cells that can cycle these magnitudes are commercially available and used in large scale energy storage products." - Tesla Investor Relations

Of course, Tesla has chosen to optimize different characteristics for the battery cells used in their vehicles up to this point. This fact demonstrates why the announcement from CATL is not ground-breaking without knowing the other characteristics of their million-mile battery. In fact, the one additional detail that was shared was that the batteries would be more costly.

Looking at the competitive landscape of electric vehicles, it's tough to determine an automaker that would have interest in these more expensive cells. Legacy automakers are struggling to deliver cost-competitive electric vehicles already. The additional lifecycle is likely an unappealing tradeoff for higher cost.

To capture the value of longer lifecycle batteries, an EV must have very high utilization. At an average of 12,000 mile per year, it would take 83 years to accrue one million miles. Optimizing for that use case would be wasteful without higher utilization. Autonomy goes hand-in-hand with a million-mile battery because of the expected increase in utilization it allows for a vehicle.

Without a clear autonomous electric vehicle strategy, higher lifecycle packs aren't necessary. With that understanding, it isn't surprising to see CATL is waiting for orders on their announced technology.

"If someone places an order, we are ready to produce." - Zeng Yuqun, CATL Chairman

One reason Tesla's Battery Day is so highly anticipated is because Tesla is expected to share much more detail than CATL did on their battery technology and roadmap. Battery Day should provide more clarity on Tesla's competitive advantages, but this analysis should assuage any fears that CATL has stolen Tesla's Battery Day thunder.