Tesla's Battery Day: Why It Doesn't Matter
Every year around this time, Tesla's (NASDAQ: TSLA) shareholders get together to listen to speeches, hear news and plans, pat each other on the back, and generally get a sense as to where the company will be heading in the coming weeks and months.
This year, according to the company's living, breathing hood ornament, Elon Musk, one of the major topics will be batteries.
Batteries, if you're unaware, are the single biggest stumbling block for electric vehicle makers when it comes to producing truly mass-market products.
The battery array isn't just the most expensive system that goes into any EV; it's also the system that dictates how much cargo the vehicle can carry, how far the vehicle can go, how fast the vehicle can be charged, and ultimately, the service life of the vehicle.
It is the proverbial bottleneck in terms of improving just about any other functional factor of the vehicle in question.
Right now, Tesla is at the crossroads of two different approaches to battery design. The two competing options are LFP — iron-phosphate-based cells — and nickel-based cells.
A Tale of Two Batteries
Nickel, at the moment, shows the most promise if the goal is to create long-distance EVs. Not everyone needs to drive 400 or 500 miles without stopping. But for those who have no choice, long-haul truckers for example, nickel is the current go-to.
The problem with nickel is the price. While nickel can produce a 500-mile range, what it sacrifices is economy.
Iron, on the other hand, while only capable of 200 or 300 miles at the most, is 20% cheaper. Both options offer benefits. Both options come with a price.
It's a big enough problem, in fact, that today it stands as the primary hurdle between Tesla and the promised land: a mass market vehicle that will be able to unseat the likes of the Toyota RAV4, the Nissan Rogue, and the Honda CR-V as the three best-selling passenger vehicles in the U.S. (excluding pickup trucks).
At the moment, all three of these high-volume, non-electric offerings beat the cheapest Tesla by about $5,000 in terms of five-year operating cost — and that's with the $3,750 tax credit due to the Tesla buyer.
With these purely economic disparities still proving to be a thorn in the side of Musk's vision for a fossil-free future, there clearly needs to be some sort of breakthrough in the realm of batteries for the corner to finally be turned.
Will Everything Change on September 22?
It's precisely this sort of breakthrough that shareholders are anticipating for next week's Battery Day discussions. Based on his own comments, Musk is just about ready to jump out of his pants with anticipation.
“The real limitation on Tesla growth is cell production at an affordable price, that’s the real limit, so that’s why we’re going to talk a lot more about this on Battery Day, because this is the fundamental scaling constraint,” he said during the company's Q2 shareholder call.
For someone who has been following the story of Tesla closely for the better part of a decade now, I can't help but feel somewhat deflated that Musk's attention is so closely focused on the battery packs.
Why? Because while the issue of batteries has gotten a lot of attention, and has even spawned an entire series of Gigafactories, a potentially greater problem hasn't received so much as a mention from the soon-to-be newest member of the 12-figure club.
That potentially greater problem: Tesla's electric motors.
Each and every current Tesla model carries within it the DNA of failure. I know that sounds dramatic, but it's the cold, hard, honest truth when it comes to its vehicles' power plants.
Why Does Tesla Rely on 200-Year-Old Technology?
Its motors, which are still based on the original Michael Faraday design of the 19th century, carry some of the unwanted shortcomings inherent to early electric motor design.
Inefficient operation at all but a single, very precise motor speed is the main problem, and it leads to a host of secondary issues, such as decreased service life, increased wear and tear, and an elevated risk of catastrophic failure.
Tesla's biggest mouthpiece won't spend much time on this matter, however, because it's a matter that plagues all EV makers. In other words, it isn't so much a problem at all as it is a known and universal characteristic of electric motors in general.
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That is... until one company came up with a solution to this nearly 200-year-old shortcoming. Once that happened, Tesla's motors, and its cars, became obsolete.
That may sound even more dramatic, but it's also the cold, hard, honest truth. Every Tesla, and in fact, every EV in mass production today is already a relic.
And it's all because one tiny Canadian tech firm, one that I bet you've never heard of before, finally managed to improve upon Michael Faraday's electric motor design from the pre-American Civil War era.
Using artificial intelligence and a highly precise method for managing charge, the engineers at this Canadian tech company found a way to squeeze significantly more power out of its new-generation electric motors, across the entire performance spectrum.
More power for the same amount of energy invested means more efficiency, less heat, less wear on the motor, and ultimately, a longer, more hassle-free service life.
Motors... Just the Beginning
The implications for the EV industry are huge. The only comparison I can think is what the aircraft industry experienced when jets began to replace piston power.
But the broader implications are even bigger. You see, while the electric motor is perhaps the most commonly used electric device type in the world today, the electric generator, which is nothing more than an electric motor running in reverse, is by far the world's biggest producer of electricity. Ninety-nine percent of every megawatt produced on planet Earth, in fact, comes from one form of generator or another.
And each and every generator stands to produce more electricity per rotation if it's equipped with the new technology I just described above.
Never mind iron-phosphate or nickel. That distinction will be insignificant when compared to the changes possible once this smart power management tech is employed on a mass scale.
The company behind all this is understandably secretive about its technology, but soon, the story will be too big to keep buried. Its tech is already finding its way into consumer products like electric bikes and electric boats. Soon, electric trains, wind turbines, and a slew of other products could be hitting the market.
Which means that in the coming months, Tesla (and Elon) will have a major decision to make about the future.
Right now, you have a chance to beat Musk to the punch by getting the full story on this tech and the company that's bringing it to the consumer market.
It could be one of the greatest investment stories of the decade as this company's stock, which is already public, is trading for right around $1.
Who knows where it will be this time next year?
I recently published a detailed report on the topic and released it to my readers. It's got everything you'll need to be informed on the tech, the company, and the plan.
Fortune favors the bold,
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