Auto industry tesla-snow-2

Published on May 7th, 2014 | by Christopher DeMorro

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The Tesla Gigafactory Could Keep Model S Owners Driving For Decades

tesla-snow-2

Imagine if the next new car you bought lasted the rest of your life? The Tesla Gigafactory could make that possible, selling new batteries to old Teslas. This could have an even more profound impact on the auto industry than Tesla’s direct sales model, keeping cars on the road for decades instead of years.

Elon Musk sure seems to be in a hurry to get the Gigafactory going, perhaps even breaking ground on two locations at once, just to make sure there are no delays. Why? I have a theory, and it’s a simple one; Tesla is going to need a lot of batteries soon, but not just for new cars rolling off the assembly line. By 2020, when Elon wants the Gigafactory working at full capacity, the first Model S sedans will be running out their 8-year battery warranties. These warranties are rated at an unlimited amount of mileage, but don’t cover capacity loss, a problem not even Tesla can outrun.

That doesn’t mean the battery will be useless, but it will mean many owners are operating with less range than they’re used to. How much? There’s no way to tell except to wait, but by then I expect Tesla to have much better battery packs to offer owners. What if you could replace a battery that gets 265 miles per charge with a battery good for 400 miles or more? What Model S owner wouldn’t want that option?

It’s frankly a brilliant scheme on Tesla’s part, as they can create customers for life needing a steady supply of replacement batteries. You’re basically wrapping up a lifetime of service costs into a single bill, as the Model S needs little more than a few fluid changes and tire rotations over the course of its service lifetime. Minimal maintenance is one of the biggest advantages of electric cars, and one of the main reasons car dealer lobbies are battling Tesla’s direct sales model. But Tesla isn’t actually getting rid of those costs if you think about it; they’re simply pushing them off for eight years, and wrapping all that potentially-lost profit into a single battery swap.

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It’s a great secondary source of income for Tesla, but it’s also a huge boon for customers. The simplicity of electric motors means they can run for decades without needing any sort of maintenance, and the ease of swapping out the battery pack is inherent to Tesla’s design. Now, instead of buying a new car every few years, all you need is a new battery at perhaps 1/10th the cost of a new car, giving your old ride new life in a matter of minutes.

Now, every person that’s purchased a Tesla becomes that much more likely to come back for a second or even third new battery, giving new life to an old car. It’s also the only way I can figure that Tesla will actually need all the planned volume for the Gigafactory.

Elon’s contract with Tesla that he signed last year calls for annual production of 300,000 vehicles by the end of his ten-year term in order to receive all his bonus pay. That’s a little more than half of the 500,000 batteries the Gigafactory can produce, and while other automakers may opt to buy some Tesla batteries, I’m not sure that’s the real game plan here.

Instead, Tesla could be creating a generation of lifelong customers. So far their customer satisfaction is the highest in the industry, and their response to criticism has been swift and on-point. But while everybody is focused on Tesla’s direct sales model, this could end up being just as dramatic a shift away from the auto industry as we know it.



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About the Author

A writer and gearhead who loves all things automotive, from hybrids to HEMIs, can be found wrenching or writing- or esle, he's running, because he's one of those crazy people who gets enjoyment from running insane distances.



  • UKGary

    One more factor missed in the article is the fact that the old Tesla batteries will have a secondary market for both on grid and off grid electricity storage – an important service which will become increasingly valuable and important as intermittent renewable energy from wind and solar capacity increases.

  • t_

    We’ll see how long a Tesla car last. A car is not only an engine. And modern engines are well doing for 10 years with no major problem. Actually the suspension is making more problems in the first 10 years than the engine. And with the big weight of the Tesla S – their suspension parts will deffinitely not las for ever. And gearboxes go broken too. And the electronics usually does not last much. So, enough parts to go broken and to bring someone to the thought of buying a new car. In 10 years many would not like the design so much…
    I must say, I like the idea of being able to use one produst longer, but don’t think this is the case.

    • Johnny Le

      You should read up on it more. Elon said there are only six things that need to be replaced regularly: four tires and two windshield wipers.

      • john

        Of course Elon said…. I like Tesla a lot but I’m sure other items will fail, not just the battery.

  • Adrian

    Audi already has a model that has been on the road for 2 decades now. And it’s not even electric.

  • what!

    elon is a true genius, i have absolute faith in the man, they come to this planet ones in a hundred years or so, my plan is to buy tesla e, whenever that car comes out, go elon, truly admire you, only in america,

  • https://medicationsafetyfoundation.org George

    So one thing that Tesla hasn’t said (I don’t think), is that they are Not allowing old model S customers to upgrade their batteries (from 40kW to 60kW/80kW). Having to commute a bit longer, I asked about upgrading my 40kW battery and was surprised to learn that this was not allowed any more. The rep (from their Fremont Tesla factory) would not tell me the reason; just that “Upper management had made that decision. The last upgrade was in December 2013.”

    It is not coincidental that Tesla’s Gigafactory is being built now, and they want to sell model S owners the battery replacements by 2020. The only thing I hope for is that the new replacement batteries will not be sold at a premium (more than the $10-12,000 which they previously offered for upgrades).

    In the mean time, I am SOL and will need to find third-party chargers, since Tesla will not allow 40kW battery model S owners charge at their Fremont Factory, not even if I wanted to pay $2500 to do so.

  • Brian H

    Listen much? [youtube.com/watch?v=zWSox7mLbyE] JB Straubel is talking about residential/commercial/utility static backup and storage, and is allocating 15 GWh of the factory to that, and says that barely tweaks the need and easily accessed demand. TM is using its own factory as a test case and platform.

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