Cheaper Battery Packs:
1) Tesla’s battery pack strategy is very similar to its Autopilot strategy. It is all about vertical integration, software & fleet learning.

2) Tesla’s pack costs benefit from a lean and high tech design as well as from the high volumetric energy density of its cells, but also because it has shifted cell/pack hardware complexity into better (likely neural net based) software.

3) The Munro teardown found Model 3 pack cost at $30/kWh, half of the $60/kWh in the Chevy Bolt, despite Model 3 pack’s ability to use higher energy density cathode chemistries & much simpler and cheaper battery cell designs.

4) Tesla is the only automaker that can continuously collect data from its customer fleet, it is also the only automaker that has designed its own software, semiconductors and other pack components in-house (normally these are outsourced to multiple suppliers).

5) For the battery it can collect information on charging, battery temperature, battery capacity changes, voltage, degradation. The statistical data is fed into Tesla’s BMS to precisely manage tiny differences in each cell’s performances & provide equilibrium for the full system.

6)Tesla’s BMS software use multiple in-house designed ASIC chips called batman & robin for cell balancing. I think it is highly likely Tesla’s BMS is neural net based with data fed into a neural net to optimize management and balancing across the 4,000+ cells.

7) The BMS software delivers:
A) High useable capacity of the battery cells. B) High & safe charge rates. C) High safety despite the less stable high energy density chemistry. (The software ensures temperature is not allowed to rise and prevents metals deposits forming).

8) D) High safety despite simplified cells without in-built safety features. E) Limited degradation & long life (in miles) vs competition due to Tesla’s precise cell balancing. F) Resilience to a certain failure/error rate of cells.

9) Together with the better software, Tesla limits (as far as we know eliminates) the dangers of high Nickel cathodes by using pack materials with low heat conductivity and using inbuilt thermometers.

10) Moving so much of the cell/pack tech/management into software rather than hardware means Tesla can use the same hardware designs for multiple different products - semi/storage/performance cars/pickup/Model 3 etc, giving better economies of scale.

11) Tesla’s reliance on fleet learning, vertical integration and software as the core of its battery strategy gives it a huge advantage against ICE OEMs and as far as I know Tesla is now so far ahead nobody is even trying to copy their approach.

12) ICE OEMs do not have the vertical integration to design a harmonized overall system. They do not have ability to collect data from their fleet. They do not have software or AI expertise to move to a software first approach.

13) Unlike Tesla OEMs don't have 10 years of data to feed into their system to enable use of cheaper cells & higher Nickel chemistries. It is very high risk to roll out a new high density battery chemistry without first having fleet data to optimize the software to ensure safety.

14) As Tesla bears UBS write: “Despite Panasonic's cost advantage we expect to see limited adoption by other OEMs. A sophisticated battery management system (Tesla produces in-house) is required for the format and we do not think this is easily replicable.”

Better Battery to Wheel Efficiency: https://twitter.com/ReflexFunds/status/1207691740758589440?s=20