If one factor defines the cost of an EV and its highest cost presently relative to its fossil fuel-powered equivalent, that has to be the cost of the battery pack that goes into the vehicle.
Although most manufacturers are increasingly looking to third-party suppliers who assemble the battery packs for BEVs, Tesla had, from the outside, focused heavily on the creation and production of this critical component of the vehicle.
According to a CNBC report, a study carried out by Cairn Energy Research Advisors, which looked specifically at the cost of manufacturing battery packs, revealed that Tesla is currently at a significant price advantage compared to its completion.
The media publishes that “Tesla pays an average of $142 per kilowatt-hour (kWh) for cells purchased from its three suppliers: Panasonic, LG Chem, and CATL.”
According to the US source, “GM pays an average of $169 per kWh, while the industry average is around $166 per kWh.”
What all this translates to is that Tesla is undercutting the entire market by having the ability to manufacture the battery packs at a much lower cost when compared to its competition.
The Cairns data cited by CNBC suggest that Tesla’s battery packs cost an average of $187 per kWh, whereas General Motors’s cost is $207 per kWh, and the market averages $246 per kWh.
Sam Jaffe, CEO of Cairn Age, concludes by referring to Tesla’s global revolution by saying: “Look at what they’re doing in Shanghai and Berlin and now in Austin, Texas. They’re all accumulating factory after factory.”