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Why The $25,000 Tesla Is The Next Big Thing

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Electric vehicles have fast been revolutionizing the automobile industry – that is something you have been hearing for a long time now, right? But how many of us know how that is actually taking place? To put things simply, electric vehicles have a zero-emission running life, which means that from the point that a car is ready to be sold, to the point it gets discarded, an electric car will emit next-to-none greenhouse gases. Of course, the battery production emissions are just as harmful for the environment, but over the course of the vehicle life, it gets compensated. The major reasons that electric vehicles are turning heads are the performance specs, with instant acceleration and sporty looks making these cars irresistible. But is a performance-oriented design the only thing that a buyer looks for?

$25000 Tesla Car

Why The $25,000 Tesla Is The Next Big Thing

The United States of America is the biggest market of electric vehicles, and the reason for this is the fast-charging network spread across the country, which is far superior to any other country. European countries are slowly turning towards the electric world too, and many European countries have also seen a robust network of superchargers being set up. And the biggest contributor to this upward curve has been Tesla Motors. In the last 10 years, Tesla has completely changed the look of the electric vehicle industry, with models that put even some ICE (internal combustion engine) vehicles to shame. Stylish looks, crazy speeds, and acceleration timings, and fantastic single-charge range has been the forefront of Tesla’s game-changing plan. But even with so much progress in battery technology, the cheapest Tesla still costs a little less than $40,000.

The Battery Day Story

The recent Battery Day event that took place in California on September 22nd gave shareholders a glimpse into Tesla’s future plans. Many interesting things like a new battery, a new variant of the Model S, and the new factories that are coming up were discussed. Among all this, one of the things that got a lot of attention was Elon Musk’s confirmation of the $25,000 sedan, which will be coming in the next three years. Going by Tesla’s penchant for delaying initial deadlines, one can expect this model to be launched by 2024/25. The reason for the amount of excitement that this announcement has caused is the affordability. Say what you will, owning a Tesla isn’t something that any person working in the middle class can practically think of. With a high range of pricing, most Tesla owners today tend to be from at least the upper-middle class. And with almost none of the electric vehicle brands offering a vehicle in a lower budget, most of this class moves towards the ICE vehicles. This is something that Musk wants to change.

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By introducing an affordable Tesla, Musk hopes to increase the number of electric vehicles running on the roads to reduce the immediate impact of carbon emissions. And by having more Teslas on the road, the future of self-driving cars becomes more concrete, with almost all Teslas having the hardware capabilities for traveling driverless from one spot to another. Keeping this in mind, the California-based company has announced this new model, which is now confirmed to be a sedan. A small size electric sedan running on the streets with full self-driving capabilities will boost their already-soaring sales as well. But the biggest hurdle in bringing an affordable Tesla to the market is the cost per kWh of producing the battery.

Cost Per Kilowatt-Hour

Reuters recently claimed that for electric vehicles to be as affordable as the ICE vehicles, the cost per kWh of producing a battery pack has to come down. The magic number for the electric vehicle industry to challenge the gas guzzlers is $100 per kWh. The current cost of a Tesla battery pack is roughly $156 per kWh, but the company is planning to make massive reductions in this cost. These plans are taking into account reductions in cost in the battery design, battery materials, and battery production.

  1. Battery Design and In-House Manufacturing

The new cell that Tesla introduced on Battery Day is called 4680, with dimensions of a 46 mm diameter and 80 mm length. While this is bigger than the current 2170 battery cell, Tesla has brought in some major changes in the base design, none bigger than the removal of tabs from the interior of the cell. This change brings in major improvements, as it reduces the manufacturing time per cell. Cells with tabs require stoppage in automated assembling when the tabs are inserted. Now, with tabs having been removed, it paves the way for a more streamlined manufacturing process with almost no interruptions. This new design will give the battery pack 5 times more energy, 6 times more power, and roughly 14% more vehicle range. This new cell will be manufactured by Tesla themselves, as they have come to understand the need for an in-house production facility. After the 2018 fiasco, which saw a lack of sufficient cells provided by Panasonic to Tesla, the Model 3 deliveries got delayed. While Tesla will continue to give battery production orders to Panasonic and other companies, the in-house production facility compatible with Tesla’s manufacturing technologies is expected to give the production rate a major boost. This will help Tesla in achieving their ambitious goal of producing 20 million cars annually in the recent future. I say ambitious, because the 2018-19 production of overall passenger cars across segments was 80 million.

  1. Cell Chemistry

In addition to this, Tesla is planning on making some radical changes to the materials that are being used in their battery production. The cathode that is currently used in Tesla vehicles has cobalt as a primary component. Cobalt is an expensive material to excavate, and the conditions under which it is mined have many human rights violations. Keeping this in mind, Tesla is moving away from this material and is going to completely change the design. They are going to introduce three types of batteries for their future cars – iron-based, lithium + manganese-based, and full lithium-based. The iron-based battery will be used for medium range vehicles, and the $25,000 car will also be part of this type. The basic cell chemistry of this cell will be lithium iron phosphate, which costs roughly $80 per kWh, which is expected to cause a big reduction in the cost. The lithium + manganese type of battery will be used for the long-range variants of the passenger cars, while the full lithium battery will be used for heavy-duty vehicles like the Cybertruck and Semi. Nickel will replace cobalt in cathode chemistry, and this is a good step for the environment. 20% of nickel components can be easily recycled, as compared to cobalt’s 2%. Along with this, the amount of nickel that can be mined is much higher than cobalt, which means greater availability of material for increasing battery production.

Tesla also plans on changing the anode material from graphite to silicon, as the availability of silicon in nature is huge. These changes will constitute roughly 17% reduction in cost per kWh of battery manufacturing.

  1. Cell Vehicle Integration
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Tesla has been working on changing the way they manufacture their vehicles a lot, but they also have brought in some changes to their basic design structure. Having bought huge casting dies for the Gigafactory Shanghai, the Model Y design was changed such that the rear part of the car can be divided into just two big casted parts. By having such big parts being casted completely, they managed to bring down the number of parts in the rear half of a Model Y from 50+ to just two. This helps reduce manufacturing time a lot.

Another change that Tesla will bring in is the cell-vehicle integration of battery packs. This will consist of a battery pack that gets integrated into the vehicle design, rather than having it as excess load in the storage. This helps to reduce the weight and space of the battery pack and enables Tesla to put in extra cells that will help increase range. An example of this can be seen in the projected range of the Model S Plaid, which is expected to have more than 520 miles (837 km).

These steps are expected to help Tesla reduce cost per kWh to go down by 56%. All these points in one direction for Tesla – vehicular production costs going down. And with lower production costs, it will become easier for Tesla to bring in a car that costs $25,000. This model will initially be launched in the USA, with Musk even having said that they could be used as robot taxis, with their full self-driving capabilities coming into play. Once established, Tesla will be looking to target the markets of Europe, India, and China for major sales of this model. The reason for this is quite clear – these three markets account for half of the worldwide passenger car sales. In the year 2018-19, total passenger car sales reported were 80 million, out of which 22 million came from China, 15 million came from Europe, and 3 million from India. With cheaper alternatives to cars being a hit in the Indo-China region, this model can cause waves if a proper charging network gets installed. All this being said, it remains to be seen whether Tesla actually sticks to the $25,000 price tag, as well as the three-year timeline. Even with little changes here and there, the changes that Tesla is bringing is set to revolutionize not just the electric vehicle industry, but the entire automobile sector as well.

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