Cheap Batteries Will Make Tesla's Model S Profitable

As is the case with development costs for normal electronic appliances, it comes as no surprise that battery costs for electric vehicles should go down over time. but with billions being invested in electric vehicle development, pioneering companies will have a difficult job reaching the point of profitability.

According to a recent statement made by company execs for Bloomberg, Tesla Motors believes that cheaper batteries will make its Model S sedan profitable with much lower sales than Nissan Motor Co. seeks for its Leaf car. Their new four-door all-electric sedan, expected to cost $57,000 (€42,833), will use cheaper battery cells similar to those in laptops, that will turn a profit for the California-based company after just 20,000 annual deliveries, Chief Technology Officer J.B. Straubel said in an interview.

Nissan’s choice to use a larger type of lithium-ion battery for the Leaf means “they will have a cost challenge that will be more difficult to solve. It will require a lot higher volume before they really get to a cost point that is internally sustainable,” according to Straubel. By comparison, Nissan’s CEO has said combined battery-car sales for Nissan and affiliate Renault SA may need to reach as high as 500,000 units per year before turning a profit without government aid.

Tesla’s battery packs, which comprise of thousands of small lithium-ion cells similar to those used in portable computers, may cost just $200 (€150) per kilowatt hour, compared to about $700 to $800 (€524 to €601) per kilowatt hour for large-form cell lithium-ion packs, stated Martin Eberhard, a Tesla founder and former chief executive.