Tesla Battery Day will mark dramatic industry shift

Business news |
By Nick Flaherty

The postponed Battery Day by electric car maker Tesla this week will have a profound effect on the industry. While many rumours circulate about the content of the day, one thing is certain – it will mark a dramatic shift in the way the battery industry operates. This has consequences for the global economy, as the European Union pointed out last week.

No longer can battery makers develop new battery systems themselves – car makers have realised that this is a key capability. Tesla commissioned leading researcher Dr Jeff Dahn at Dalhoustie University in Canada five years ago to work on new battery technologies, from simpler electrolytes for ‘anode free’ metal batteries to new test methodologies, and we are likely to see the results later this week.

Tesla’s $200m purchase of ultracapacitor maker Maxwell Technologies similarly gives it higher efficiency dry electrode technology for longer life time battery cells. This is potentially behind the Million Mile battery, boosting the lifetime of the battery pack from 120,000 miles to day to over 1m.

The role of Panasonic will come under renewed scrutiny after the Battery Day. Setting up the first battery Gigafactory in Nevada for Tesla’s high volume Model 3 production with its own technology was a bold, and expensive, move. Panasonic is only just into profit on the deal, five years on. And it hasn’t given the company the dominance as a supplier it expected. The automotive division in Panasonic is still listed as ‘recovering’, and other Tesla suppliers such as CATL and LG Chem are looking hungrily at the opportunities.

CATL in particular has said it has a million mile battery, although the technical details are limited.

Panasonic’s deal is also for the one model. While most of the cars are made in Nevada, it also ships batteries to Shanghai for Tesla’s Chinese plant, while at the same time CATL ships batteries over from China to Fremont for Tesla’s other models.

However Tesla CEO Elon Musk has said the company would expand its business with all three suppliers as the sticking point is the availability of low cost cells. He is also at pains to point out that Panasonic and Tesla continue to have a strong partnership.

All this highlights the move back to a more integrated technology stack for electric car makers, where the brands control the battery technology and form factor and the manufacturers are added value licensees. This is happening with GM’s Ultium batteries, the Mercedes deal with Faradis, VW with NorthVolt  and many others, including Panasonic and its joint venture with Toyota and SK Innovation with Ford.

These are all using different battery chemistries, limiting the economies of scale. One of the drives is improving the lifetime of NMC (nickel, manganese, cobalt) lithium ion cells while using less cobalt to make them more sustainable. SK Innovation in Korea for example sees this as a way to catapult it into the top three battery suppliers, but there are many other battery chemistries being used.

Similarly there are also new form factors, such as larger battery cells with sahpes to assist high volume manufacturing, which is also expected to be part of the Tesla Battery Day announcements.

As a result, this approach limits the ability to build factories large enough to second source and to drive innovation that benefits the whole industry. The Battery Day will shift the responsibility for that innovation back onto the car makers. For Tesla, that maybe a smart move. For others, not so much.;

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