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Tesla Motors Inc Hits Battery Target Five Years Ahead Of Schedule

Tesla Motors inc (TSLA) Model 3

Tesla Motors Inc (NASDAQ:TSLA) may be known for constant delays in vehicle shipping, but the company is ahead on a more significant metric. According to a report at ThinkProgress, the price of electric car batteries has hit a point that the International Energy Agency says makes them cost about the same as traditional combustion engine based vehicles.

Elon Musk Tesla

$300/kWh, that’s the level that International Energy estimated the cost of energy storage in electric cars would need to reach before becoming cost-comparable with gas-driven vehicles. A recent study found that battery packs made by Tesla Motors actually come in cheaper than that in 2015, five years before the International Energy Agency thought possible.

Tesla Motors makes batteries cheaper

According to a study in Nature Climate Change, the price of battery storage built by leading electric car manufacturers like Tesla Motors is already below the $300/kWh level espoused by the IEA. The study’s authors, Björn Nykvist and Måns Nilsson, had something to work with which the IEA did not, however: the knowledge that petrol is much much cheaper than expected in 2015.

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The IEA study, which was titled “Global EV Outlook: Understanding the Electric Vehicle Landscape to 2020,” was written in 2013, long before a spike in US production caused the collapse of oil prices across the globe. The new target for cost parity according to the authors of the Nature Climate Change study, is $250/kWh, a level that Tesla is quickly approaching.

Mr, Nykvist and Mr. Nilsson expect Tesla to hit that level in the next two to three years, with the firm’s massive battery building project forming the base of its attempt to lower production costs. A new level of $150/kWh, set by the new study, would lead to widespread adoption as electric cars become noticeably less expensive than gas driven automobiles.

The researchers say that that level may be possible to hit in 2020, even without a major technological breakthrough. According to their research that price point could be achieved simply through manufacturing scale and finesse.

Tesla builds batteries

Batteries are the lifeblood of Tesla Motors, so much so that some analysts are looking for the company to get into that market itself. The company has already announced that it’s working on construction of a massive battery factory in order to supply its own electric cars, but it may have other applications in mind.

Elon Musk, the company’s CEO, says that Tesla will launch a new product at the end of April and he says it’s absolutely not a car. Most analysts seem certain that the new line will be a home energy storage kit. Musk said that he was working on such a system in the past.

As the company continues to improve the price of battery energy storage quicker than previously though possible, it opens up a future in which a huge portion of the cars on the road are powered by an electrical motor. Tesla sold about 10,000 cars across the world in the first three months of 2015, far away from that lofty goal.

On today’s market shares in Tesla Motors were trading flat in a quiet day for many momentum stocks across the market. The company will announce its earnings for the first three months of 2015 on May 5, opening itself up to huge amounts of volatility as traders attempt to interpret those numbers. At time of writing shares were selling for $210.30

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Paul Shea

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