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My Conversation with JB Straubel at Hawthorne Battery Swap

Got a chance to attend the swap demo in Hawthorne tonight. Other posts will cover in much more depth.

I did have a chance to have a 10 minute conversation with JB Straubel and got to ask him several questions that have been nagging at me:

1. When will Tesla owners be able to use their own battery pack at home in the same manner that Tesla is using battery backup at Superchargers, including time-of-use (TOU) and grid buffering?

JB pointed me to the Solar City battery backup that Tesla Motors designed and sells through solar city. 10kWh and very expensive. He stated that regulatory and engineering problems prevent owners from having the option of using the car battery for that purpose. He did NOT seem inclined that this would be happening in the future, although I tried to drag it out of him.

2. What is the status of the metal-air patents/range pack in the frunk?

"Some patents don't end up in the working product. However, the tesla cell chemistry is improving and a 4-500 mile pack is not that far away."

3. Is the jump from 90 kwh to 120 kwh charging the last speed increase?

No. The charging speed will be increasing.

4. How do Tesla's 18650 lithium ion cells differ from the off-the-shelf versions?

Tesla is using the 18650 "form factor" but the chemistry and several of the components are designed by Tesla and nobody else has anything as advanced. A regular laptop battery placed into the Model S would short/burn up/fail immediately.

Hope this helps clear the air with some of the wilder speculation. Although . . . things can change.

@ Kleist - I'm using a Prius as an example because that's what I'm currently driving, and I'm evaluating the cost/benefit of the swapping based on what I'm currently paying. Or course, swapping is not supposed to be a replacement for charging - it is supplemental only. In that respect, the overall cost comes down tremendously. I'm very curious to see how popular the swapping becomes - who knows, maybe it's the next big thing?

"survey all the existing and prospective buyers" -- LOL.
The pool of prospective buyers is everyone who uses cars. The point is to reduce the "barriers to entry" for them.

The parameters were set out by Elon: whatever a local price for 15 gallons of gas would be.

Brian H,

You're right (LOL), but I'm wondering if Tesla has polled owners or prospective owners (with deposits) about their need for battery swapping? Maybe they are out there, But I haven't heard of one yet. I would never do it unless I could be assured that I would always have a good battery. My guess is that there would be very few owners who would utilize it. I may be willing to pay a monthly or yearly fee for this swapping option if it gave me an unlimited battery warranty along with it.

I never understood basing the price on the price of gasoline. What does gasoline have to do with TM's cost or anything else for that matter? Why not base it on the cost of electricity? Or better yet, simply set a fixed price?

I suspect it will be a fixed price, and roughly approximate the cost of a tank of gas. I think they already ran preliminary numbers and realized they could make the comparison because the cost + sufficient margin for swapping the pack could come in around $50 - $80, making the comparison logical and easy.

Personally I think swapping the battery pack will be bigger than recharging in the long run; not everybody is willing to sit down and take an hour to fully recharge their battery. As one person noted, they couldn't see where paying $80 (really, 15 gallons costs $80? Where?) to save 20 minutes but that person also ignores that he wouldn't be getting just 20 minutes' charge, but a full hour's worth in that 90 seconds. But that's only the tip of the iceberg.

If Musk and Tesla are thinking the way I believe they're thinking, by swapping batteries you offer huge savings for both the company AND for the customer. Every time you swap batteries, the automated systems could immediately activate an R, R & R procedure; Recondition, Recharge and Reuse. It could perform diagnostics on the battery pack to determine its age, charge history and remaining recharge capacity and use that data to either pull the pack from service or send it to the next step. The system would then Recharge the battery to capacity using the slower conventional charging system, taking about 6 to 8 hours--again during which its condition can be monitored and tested for usability and finally put into the pool for Reuse--getting swapped into another car and starting the cycle all over again.

The advantage of the R,R&R system is that the batteries are constantly monitored even more extensively than the cars' onboard systems and reconditioned to ensure the longest possible usable life of the battery. At that $80 per swap, even if that one battery only gets swapped twice a month between vehicles, Tesla would have made almost $10,000 over the 10-year life of that battery alone and as more EVs hit the market using the same battery pack, it will get swapped more and more often meaning even more income for Tesla and eliminating the need to charge the customer huge lump sums for a battery swap at the service center. In other words, the swapped battery isn't a "loaner", but rather an effective full tank of energy available at a moment's notice. If, as some expect, new electric generation technologies come on line and costs fall, then the cost of recharging the batteries goes down which means even more economical EVs using the Tesla battery packs.

@Douglas R: The reason they're comparing it to the cost of a tank of gas is that you're currently paying somewhere between $60 and $80 for a tank of gas today. The demonstration points out that you could get roughly the same range out of the swapped battery for roughly the same price at half the time. Addtionally, if you're willing to spend an hour on a long drive to rest, hit the restrooms and maybe even get a bite to eat (something highly recommended to reduce driver fatigue on longer trips) then you can get that "full tank" absolutely free.

Additionally, while some believe the battery swap concept is intended to give you a "loaner" battery, I expect it's really meant to make swapping batteries in your car cheaper (no expensive lump-sum charge at the end of 7-10 years) and ensure the batteries are kept in top condition for as long as possible; automatically pulling an older or defective battery out of circulation when its capacity falls below 70% or so.

@zjimo2: I rather doubt that Tesla has polled people about their wants and desires on the system, "people don't know WHAT they want until they see it." Marketing polls are essentially useless with a technology as new as this.

With limited resources, Tesla can not afford to deploy swapping stations that could cost up to $2M including the inventory of battery packs. For what? To meet the possible needs of a fraction of the <2% of the BEVs that take long trips and choose not to use the FREE supercharger?

Meanwhile, the trend is for the battery energy density to increase at the rate of 7-8% per year. Tesla itself could optimize the design of its autos including the Model S, X to cut the weight using stronger alloys, improved bearings to reduce friction, etc. The induction motor and the PEM efficiency could increased with time.

Elon has access to experts from SpaceX who understand light weight design, use of hi strength alloys. I think the swap thing was just a dog and pony show. May be to get ZEV or some other tax credits. He has shown an ability to get refined hi tech solutions so far. The swap sounds like a Coliseum contraption from the movie Gladiator, of the Roman times.

I thought they said the price would vary depending on the cost of gasoline in the area. That's what I think is nuts. If they are setting a fixed price and simply using the price of gas for comparison and marketing, then I don't have a problem with it.

I like the idea of battery swapping as a way to keep all batteries in all cars refreshed and in good condition. However, that's not the way the program was described. In my view, the weakness of the program as announced is the need to return to the swap station and pick up your old battery (or face a hefty exchange fee if you don't). That interferes with the freedom to go where you want, when you want. It doubles the price of the swap, and more than doubles the time spent, because you need to pay to get your old battery back, even if the battery you are turning in is fully charged, and you need to return to the particular swap station holding your battery, which may be out of the way. It adds a whole new level of complexity in the need to tag batteries that are turned in, hold them until the owner returns, and re-install them (will it still take 90 seconds if the machine needs to find my specific battery, tee it up, and install it? I don't think so). Do they use my battery while they are storing it, or does it just sit idle?

Anyway, if they could figure a way to let people just keep the batteries they get from the swap station until they swap again, and not worry about having to retrieve a particular battery, I think the idea of continually reconditioning, recharging, and recirculating a pool of batteries makes a lot of sense. I have described in other posts how this could be done, so I won't repeat it here. But my view is that the technology is awesome, the concept has lots of promise, but the details of the program need work.

I believe the battery swap is as much a marketing/psychological tool as a truly needed option to most model S and future model X owners. Elon and his team know what TM and the acceptance of EVs needs far better than I, so I am willing to accept this decision as a good one.
I doubt I will be using the battery swap, but most of my mileage will be local and my daily usage will fall well within the capabilities of an 85KW battery.

Bubba2000 --

Advantage of the Tesla swap business is scaling (and for now, 3 bonus zev credits/car). The more batteries, the cheaper and more advanced they get. I think they should really reduce the price per swap. Make the bet that battery production efficiencies will go up. At the end of the day, Tesla owns all the batteries in the swap system. After 3-4 years, they could reconfigure each used pack into 4-8 (or more) home storage packs and sell them to SolarCity. Also, refurbish used 85 packs and sell them as 60 packs in new models of MS/X/GenIIIs. Sell them at 10-20% discount of new 60 pack MS/MX/Geniii. Give same 8 year warranty too.

As such, I think the swap business is about the future secondary car market as well as rental/lease/battery sale business (and home energy storage system business too).

The reason it's being marketed as quicker than gas is because that's the most immediate advantage for the consumer right now. The things I've described above wouldn't resonate with consumers as much, however, in a few years down the road it will.

The cost of the swap stations is one-quarter what you guessed. The rest of the analysis fails; this is a (very inexpensive) marketing expense.

The price is indeed tied to the local cost of 15 gallons. It's intended to be locally meaningful, and attractive. And the battery can be returned to any station, though of course you will not get your own original back that way. So maybe you'd just as well retain the 'swap'. The batteries are electronically tagged; it's easy to query them for ID. Anyhoo, it's what Elon specified; I wouldn't bet against it.

Brian H - not only inexpensive, but probably a fast pay off too. The moment TM has a swapping station operational in CA every car gets more ZEV credits ( as JK2014 mentioned )... same is true for the NY Boston area. Nobody knows how much the additional ZEV will be worth, but you have to earn then first before you can sell them. So you spend lets say $10M on swapping stations and potentially sell $100M worth of credits within a year. I am sure that is why TM had the demo and aiming at 4Q first operational stations... it works- great do more, it doesn't work - fine the slow complying ICE manufactures paid for the trial and some extra cash.

Brian, the battery can be returned to any station, but unless you return it to the station where you left your old battery, and unless you swap it back for your old battery, you could be paying a lot.

Also, I agree it is not a problem to tag the battery. But how do you store it so that it can be quickly identified, loaded onto the machine, and then installed in your car? I envision a giant jukebox carousel-type mechanism, where the turntable rotates to put the battery into position for the machine to load. Not impossible, but something taking up a lot of space, and I guarantee you such a device was not under the ground when Elon made his demonstration. And all for what? So that you can get the same battery back, when all the batteries should be pretty much fungible, or at least objectively graded as to condition.

As to cost, I think the point is that each swap station is about $500,000, but to that you need to add the value of around 50 batteries. We don't know what batteries cost, but at $20,000 each, that's another $1 million. And I'd bet that doesn't include the carousel.

This is not an issue if TM is putting in a half dozen stations to test out the concept. However, at 200 stations (all the supercharger sites), you are no longer looking at chump change or a marketing expense. It is a substantial portion of the company's anticipated profits over the next year or so. That's not to say it shouldn't be done. But if it is to be rolled out across the country as suggested, then it ought to be attractive enough that it can pay for itself. I am pointing out one element of the plan -- returning and re-swapping for your old battery -- that seems to me to be pretty inefficient and unattractive.

Is there a ZEV credit system in the NE? I thought it was a strictly CA program.

The swap/exchange cost depends on the difference in age/degradation between the batteries. If it's "a lot" then you're getting what you pay for in terms of capacity and life expectancy. "Optionality" rulez.

Ever seen an an automated computerized inventory bin system? Racking and retrieval has come far since the days of 45 carousels.

Introduced slowly, as demand builds, it remains a minor item in the marketing budget. It is expected, as is any marketing (or other) expense, to generate more net revenue than it loses, so will have no negative impact on profit. As pointed out above, just the impact on ZEV credits may pay off at a rate of about 10:1. What's not to like?

Elon's first sentence "preserve the optionality." That's key. For a busy person that travels a lot every day 50-100 dollars for a 90 second battery swap might be pocket change and could be the difference between a Tesla being suitable to their needs or not. If they can swap a pack attached with 44 bolts today, tomorrow (with a little retro fitting of the pack and chassis to something simpler than 44 bolts) they could probably swap packs in a small fraction of that time. 10 second swaps? I wouldn't put it past them.

Also, swapping shatters the range anxiety argument. Can you hear the dominoes falling in the ICE and oil industries? but they don't really have to deploy them. They proved it can be done. Naysayers look more foolish each time Elon speaks.

Swapping opens up the possibility of selling cars sans battery and getting owners on a subscription plan that is an ongoing revenue source.

It makes really inexpensive GenIII or GenIV vehicles possible. Take the battery and all the whistles and bells out of a Tesla and what do you have? A frame, a body, a small, inexpensive motor and a computer. How low could they price basic cars like that...15k, 10k, less? Now THAT'S a car almost anybody could afford, even with a nominal monthly payment to lease the battery.

There are so many business models and possibilities already and Tesla has only been delivering the Model S for 11 months. I would bet they still have a lot of tricks up their sleeves and are thinking up more all the time.

Tesla has changed the game again and again and they are just getting started. I'm done speculating about what they can or can't do. I wouldn't be at all surprised if I yet live to see Tesla introduce the flying cars kids of my generation were given to believe we would have by the year 2000. Elon and company are so far ahead of mere mortal humans. They are toying with us. Beam me up Elon.

Sorry, meant to post in swap thread. Oh well, the conversation is going on everywhere.

Great coup SamoSam getting to talk to a couple of the movers & shakers at Tesla.

I can see at least one great benefit of the battery swap system for Tesla that I haven't seen mentioned yet. And that is the battery swap system will create tons of used batteries as people upgrade, especially when the 500 mile batteries come out.

And what will Tesla do with all these extra used batteries, potentially obsolete, not needed at the swap stations ?

How about the option to lease a used battery with a new car purchase ? This eliminates the up front cost of the battery, lowering the purchase price $5k to $10k on a new car to help juice sales. Lease payments are similar to what gas would cost. And not having to put new batteries in every car will speed up manufacturing overall . It also helps solve the problem of battery obsolescence, while allowing Tesla to get fully paid for the battery over time.

And if a leased battery runs low of recycle charge, who cares? The car owner doesn't own the battery, it's under contract, so Tesla just swaps it for another used battery, no big deal with swap stations. They allow easy leasing of used batteries, lowering up front cost of new cars.

May even help move the stock needle higher.

So that's one possible big advantage of swapping stations I haven't heard comment on yet, if Tesla chooses to do it.

With regard to pricing a swap for a fully charged pack: except for MS owners having experienced superchargers, most people just don't expect the energy for free with cars and thus wouldn't mind paying for it. Surely there's an upper limit for that, but making it comparable to local pricing sounds very reasonable.
Psychologically it's the pure convenience factor just like stopping by a fumes station to fill up whenever one wants.
Once people can see swapping stations in action and/or hear/read about in local news, ICE owners will definitely reconsider their remaining doubts about EV's, especially TM.
Certainly, some details might need to be fleshed out when the times come (re: battery logistics/ownership), but I'm certain TM can come up with plenty of attractive options.

Brian - as I understand it there is also a ZEV program in MA, NY, etc... administered by the CA ZEV program. East and West credits are seperate, but West credits can be traded to the East with 30% penalty and vise versa. TM selling in NY it would create East credits...

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