Use access key #2 to skip to page content.

catoismymotor (38.90)

Tesla Motors’ Devastating Design Problem



February 22, 2012 – Comments (7) | RELATED TICKERS: TSLA

Tesla Motors’ Devastating Design Problem


Tesla Motors' lineup of all-electric vehicles — its existing Roadster, almost certainly its impending Model S, and possibly its future Model X — apparently suffer from a severe limitation that can largely destroy the value of the vehicle. If the battery is ever totally discharged, the owner is left with what Tesla describes as a "brick": a completely immobile vehicle that cannot be started or even pushed down the street. The only known remedy is for the owner to pay Tesla approximately $40,000 to replace the entire battery. Unlike practically every other modern car problem, neither Tesla's warranty nor typical car insurance policies provide any protection from this major financial loss. Here's how it happens.


7 Comments – Post Your Own

#1) On February 22, 2012 at 4:59 PM, EnigmaDude (98.06) wrote:

The solution is obvious - just add a "cato" motor.  It never stops!  :)

Report this comment
#2) On February 22, 2012 at 11:39 PM, baldheadeddork (35.09) wrote:

Can not wait to see what Toyota and Daimler have to say about this.

Report this comment
#3) On February 23, 2012 at 7:06 PM, Hawmps (< 20) wrote:

As much as I like what Tesla is doing, this is a relevant concern.  However, there something to keep in mind... this has happened to 4 or 5 Roadsters in 3 or 4 years and I would classify the Roadster as an experimental R&D vehicle.  I would expect the battery cost to decline significantly over time to maybe a $5k - $10k replacement akin to engine replacement of a newish vehicle.

Report this comment
#4) On February 23, 2012 at 7:23 PM, baldheadeddork (35.09) wrote:

You might expect that, Hawmps, but it hasn't happened yet and there's no sign of it coming anytime soon. Improvements in battery technology have not resulted in lower prices. To the contrary, the least expensive storage platform for automobiles per energy unit is still the lead acid battery. A lithium ion battery with the same capacity of a lead acid battery will be much lighter and smaller, but it will also be much, much more expensive. And Li-ion is still more expensive than NiMH. Moore's Law doesn't apply to batteries.

Report this comment
#5) On February 24, 2012 at 4:57 PM, rfaramir (29.57) wrote:

Part of the surprise is that this $40,000 event is not insurable, not by Tesla and not by insurance companies. Most people assume that such a large possible loss could be covered somehow.

But this loss is completely under the control of the user, which makes it an uninsurable event, no matter the size. It's like suicide for life insurance, or oil or gas consumables for ICE cars. If it weren't, then when the batteries started to get a little low, or if they started showing a memory effect (like the old NiCads--which they shouldn't), the user could just 'accidentally' leave them unplugged for a week or two and, voilá, bricked batteries get replaced for free (actually for whatever your deductible was). Not gonna happen!

But the free market to the rescue! A big deal was made of the possible privacy violations that Tesla is capable of (and in the article did commit) via its tracking system. This could be used by a private company (or Tesla), for a fee, to automatically signal said service company when the battery is dangerously low. Said company would have previous authorization to come and make a service visit, plug the car in for you (after determining first that it's not just in your garage where you could plug it in yourself) and give you a sufficient charge to get to the nearest plugin service station. Cost: several hundred dollars, maybe, but saves you $40,000! And the mild pain of such a service call would serve as a reminder to keep it plugged in next time!

Report this comment
#6) On February 24, 2012 at 6:33 PM, Hawmps (< 20) wrote:

baldheadeddork - valid point, but the company does not even have a factory in production yet.  After there is constant and steady production of vehicles it will still take considerable time for economies of scale to reach a point of critical mass to where there is enough supply of lithium ion battery packs to drive down the cost of production and the price of replacement.  Forget about Moore's Law, to my knowledge there are no transistors in a battery (granted there is a small management circuitry for cell balancing that probably has a few transistors)... economies of scale is key to reducing costs.

A good comparison would be solar panels.  The cost to manufacture and the price has declined considerably in recent years with more competing manufacturers and a significant increase in supply; I would expect a similar trend for these lithium ion battery packs (as I would with any new-ish technological product) as competition increases as well as supply in the market.  The cost and price of a new-ish technology also typically declines the further away from R&D you get and the further into produciton you get.  I don't usually like to speculate, but being that I have limited data, I would speculate that the $40,000 price tag would include a substantial amount of R&D dollars or return OF investment dollars in the overall cost.

Report this comment
#7) On February 26, 2012 at 5:05 PM, baldheadeddork (35.09) wrote:

@Hawmps - I'm afraid you're mistaken about the battery business. Electric cars are not using new battery technology. They're using the same Li-Ion technology used in hundreds of millions of phones and laptops every year and they are a tiny consumer of Li-Ion batteries. The only difference is the packaging, and in Tesla's case that doesn't even apply. They use the exact same cell used in millions of laptops. There are no untapped economies of scale in batteries for electric cars to exploit.

What's worse, the demand is so overwhelmingly in favor of mobile electronics that automotive applications will not be a primary factor in steering battery technology for years, if it ever happens. That is important because the needs of Samsung and Apple are a lot different than what Nissan and Tesla would want if they had the biggest say.

The big difference in battery priorities between mobile electronics and electric autos is cost. Right now Li-Ion battery packs make up almost 50% of the cost of an electric car and that has to fall if they are going to be viable. Give Tesla or Nissan the choice between a 50% reduction in cost with the same battery capacity or a 50% increase in capacity at the same cost, and they would take the price cut every time.

Price isn't as important for the makers of mobile electronics because the battery costs makes up only a small part of the total cost of their devices. Apple spends just under $6 for the battery in an iPhone, that's 3% of the total manufacturing cost and 1% of the wholesale price. If you have a choice between a 50% cut in cost or a 50% gain in capacity, you'll not only take the increased capacity, you would probably be willing to pay twice or even three times as much for it. 

That's why I think the battery situation for automakers is likely to get worse instead of better. The pressure from their primary customers (Samsung, Apple, etc) will be for increased performance and damn the cost, which is the last thing automakers want. 

Report this comment

Featured Broker Partners