Tesla Inc. (NASDAQ:TSLA) is holding a sizeable lead over its rivals in paying less for lithium battery cells with the lowest EV battery packs. This is according to a new Cairn Energy Research Advisors’ reports.
Tesla ahead of rivals because of low costs EV battery packs
Interestingly, the company will maintain the lowest costs in the EV sector through the end of this decade as General Motors (NYSE:GM) closes the gap. Cairn ERA managing director Sam Jaffe said that Tesla has put the hammer down on the accelerating pedal. Jaffe pointed at what the company is doing in Shanghai and Berlin as well as Austin, Texas, where they are piling factory after factory.
Jeff, who tracks the EV industry and battery, indicates that Tesla’s edge comes from scaling operations and its CEO Elon Musk’s persistent quest for lower battery costs. Most importantly, battery packs are usually the largest expense in EV manufacture, and they are the main reason that the average transaction price for EV cars sold in February was $53,392 compared to $40,472 for new vehicles.
Tesla pays $142 per kWh for battery cells
Cairn ERA states that Tesla pays $142 per kWh for battery cells bought from LG Chem, Panasonic, and CATL. On the other hand, GM pays $168 per kWh for its battery cells, and currently, the industrial average is around 186 per kWh. Since Tesla pays less than other lithium-ion battery cells, it allows the company to lead the sector in the cost of EV battery pack manufacture. According to Cairn ERA data, Tesla’s battery packs cost around $187 per KWh while GM’s costs average $207 per kWh. The automobile industry spending on average $246 per kWh for battery packs.
Tesla’s battery packs are 10% less costly compared to GM’s and around 24% cheaper than the industry average since Musk has pushed to cut costs in the last ten years. Jaffe said that everything at Tesla is focused on cost, and with lower-cost battery packs, the more affordable cars become.