Tesla’s upgrade mulling increased profit image

The California-based electric luxury automaker recently announced its Model S premium sedan would receive a battery upgrade, with the announcement also prompting the company to raise its base price.

After the announcement, Tesla said all Model S sedans would have the battery capacity increased by 17 percent, while the price has also soared by 6 percent – the window sticker price for the most affordable variant has gone up from $71,000 to $75,000. While no one knows how much money Tesla pays to make its batteries – supplied by Japan’s Panasonic – most analysts and industry experts believe the capacity expansions are far less expensive for the automakers then we were led to believe. According to a recent article published by two Swedish scientists in the Nature Climate Change magazine, making the batteries for today’s electric cars could be two to four times cheaper than we previously believed. The study also sees the cost being further reduced very fast – around 8 percent each year.

Bjorn Nykvist, study co-author and a research fellow at the Stockholm Environment Institute, together with his colleague, Mans Nilsson, looked at 80 different studies and forecasts from a wide range of sources, such as manufacturers, scientists, government agencies, and corporate consultancies. Doing the math and economics, they saw the trajectory of costs over time puts Tesla and other electric car producers roughly paying $300 per kwh. Nissan’s Leaf, the world’s best selling electric car, would see the battery cost only around $7,200. Tesla’s car battery production costs would then rise by just $3,000 – with another $1,000 in profit.

Via Bloomberg