Life after the car: Nissan announces second-life project for LEAF battery packs

Five Reasons Battery Upgrades For Electric Cars Aren’t (Usually) Offered – And Why You Shouldn’t Expect One

With lithium-ion battery technology improving at the kind of breakneck speeds that far exceed traditional automotive progress, anyone buying an electric car today needs to come to terms with the idea that their cars range when new — while seemingly decent for the time — will quickly be considered inferior to the latest and greatest plug-in cars on the market.

An illustration of this can be seen in the latest 2016 Nissan LEAF SL and SV, which offer a 107-mile EPA-approved range thanks to a next-generation lithium-ion battery pack that squeezes 30 kilowatt-hours of storage into the same physical space once occupied by the original 24 kWh battery pack offered on original 2011 thru 2015 Nissan LEAFs. In a year or two, the range offered by 2016 Nissan LEAFs are expected to pale into insignificance with the launch of Nissan’s next-generation LEAF, a car that is rumored to include a 60 kWh pack for a range in excess of 200 miles per charge.

Battery upgrades aren't just a case of putting in a bigger battery.

Battery upgrades aren’t just a case of putting in a bigger battery.

Even the Tesla Model S, a car which originally launched with a 40 kWh, 60 kWh or 85 kWh battery pack options, is now sold with larger, next-generation 70 kWh and 90 kWh packs offering improved range and efficiency.

This rapid turnover of electric vehicle technology, far faster than traditional internal combustion engine vehicle technology and closer to the evolution of consumer electronics than automotive technological advances, has left many electric car owners old and new to question why electric car companies don’t offer battery upgrades and drop-in improvements for customers.

The range of emotion attached to this question ranges from downright indignant fury to resigned acceptance. But on an almost daily basis, we come across someone who asks one simple question.

“Why can’t <insert name of automaker here> offer me a better (or longer-range) battery for my electric car?”

The answer? In short, it comes down to engineering challenges, engineering costs, development cycles, business models…and the restrictions doing so would place on a company.

Making a new pack for existing models isn’t easy

You may not realize it, but every time a new battery pack is developed for an electric car, small changes are made to the car itself to accommodate the change in battery pack chemistry. Even in the case of the battery chemistry change made by Nissan in order to tackle premature battery aging in extreme heat would have required Nissan to make some small changes to the way in which the pack integrated with the rest of the car.

Every time a new battery chemistry or even pack design is implemented, development funds are spent.

Every time a new battery chemistry or even pack design is implemented, development funds are spent.

Sometimes those changes are small. Some are large. Some require new hardware, some require a new piece of code.

In the case Nissan’s “lizard” battery pack upgrade, Nissan engineered a special fitting kit to enable existing first-generation LEAF owners to take advantage of the improved battery pack. But it’s worth noting in this case that the battery pack upgrade wasn’t one designed to increase capacity but improve reliability. The battery pack itself stored the same physical amount of energy as its predecessor, making an upgrade easy.

At the other end of the spectrum we have the Tesla Roadster 3.0 upgrade package for the original Tesla Roadster. A package which includes a new, more energy-dense battery pack, the Roadster 3.0 upgrade pack required Tesla to devote some significant time and energy into reengineering the entire Tesla Roadster in order to develop a compatible pack. In order to even work in existing Tesla Roadster, the upgrade process includes replacing power electronics components as well as the battery pack to ensure the car continues to operate as expected.

Engineering new packs for existing models is expensive

Which brings us nicely onto the subject of cost. While it may be relatively cheap for a company to develop an improved battery chemistry for an identically-sized battery pack, developing a longer-range pack that integrates with existing hardware can be a costly process, something that’s reflected in the big sticker price attached to the Tesla Roadster 3.0 upgrade pack.

Even Tesla has to reengineer pack upgrades for backward compatibility.

Even Tesla has to reengineer pack upgrades for backward compatibility.

Simply put, making a new battery pack for an existing model isn’t just a matter of taking out previous-generation cells and putting a newer, more energy dense set in.

The engineering costs associated with designing a new battery pack — even for a new model year car as is the case with Nissan’s longer-range battery pack for the 2016 LEAF and longer-range battery packs in the pipeline for the Ford Focus EV, Volkswagen e-Golf and BMW i3 — would simply increase overall cost to consumers if each battery pack had to be backward-compatible with every model year of car.

Development cycles are focused on moving forward, not looking back

Which brings us to an important fact you may not know: while today’s 2016 Nissan LEAF may look identical to the 2011 Nissan LEAFs which rolled off the production line in 2010 (they share the same body panels and chassis after all) there are plenty of hidden improvements and changes that the average customer won’t even notice. Those changes however, applied incrementally throughout a vehicle’s production life cycle, make it costly to ensure retrofit upgrades work with every variation of car ever made. Replacement parts based on original specification are easier to make, since they can be produced with original tooling as replica or OEM replacements for the original item.

This isn’t a new practice. Ask an aficionado of any car produced in significant volumes over the past 60 years or so, and they’ll give you a list of generally unknown changes made over the years by an automaker to a particular model of car. Those changes might be small ones — such as swapping round lights for square ones — or they may be more noticeable ones such as a brand-new gearbox or drivetrain. But as cars have become more complex, it’s become increasingly complicated for automakers to ensure that one model year of car is compatible with another, or that a new component designed for a newer version of a car fits its predecessor.

In short, automakers focus on improving future models, not breathing life into older ones.

Automakers have to focus on the future, not the past.

Automakers have to focus on the future, not the past.

Constantly improving older models makes no business sense

At the end of the day, automakers follow a fairly simple business model: make cars and sell them. And as time passes, automakers strive to evolve their cars, making them better and more refined and safer than cars which went before. Doing so not only ensures that they keep up with the latest standards and trends in the automotive world, but also keep customers coming back for newer, improved models every few years.

While it might be more sustainable to extend the life of an existing model ten or more years after it first rolled off the production line, automakers know that doing so would make little financial sense. Humans are fickle, and we generally want the latest and greatest product. While some of us are happy to own older ‘classic’ vehicles — and plenty of the Transport Evolved editorial team feel that way, the relentless quest for the next best thing means that automakers know there’s little money to be made in improving old models when their customers just want a brand-new car.

After all, even electric vehicles wear out given time. If not their battery packs, their body panels, interior or drivetrains ultimately need replacement. And when the car itself isn’t worth the money you’re spending on it, most people trade in for a more capable model instead.

Offering replacement upgrades would severely limit growth

If an automaker spends all its time working on making batteries for previous generation cars, it can't innovate as quickly.

If an automaker spends all its time working on making batteries for previous generation cars, it can’t innovate as quickly.

While there are only so many ways a battery pack can be placed in a car, there are also only so many ways a new battery pack can be made to fit an aging chassis. While automotive design cycles allow for car makers to build a brand-new vehicle on a new or modified platform every five to eight years, requiring an automaker to continually offer new battery pack upgrades for older models would also require them to stick with the same basic design in order to ensure that replacement parts could be manufactured at a reasonable price.

Without doing so, an automaker would have to make replacement battery packs for each vehicle ever made, even if there were changes in physical layout our fitment. And as we’ve said above, that would severely affect the cost at which battery packs could be made. In turn, the logical solution would be to stagnate battery pack design so it never changes, restricting the vehicle designs which can be built on top and stifling progress and growth.

What about conversions? Or Enthusiast upgrades?

There are exceptions. Tesla’s Roadster 3.0 upgrade is one we’ve already talked about: one which is so costly that only a small proportion of Tesla owners are expected to purchase it.

But there are those who convert their own cars to electric, or add their own after-market battery pack upgrades. While those vehicles prove that it’s technically possible to upgrade the battery packs of older vehicles, it’s all-too-easy to negate the cost (either in terms of time or money) which has gone into making such upgrades possible.

Most consumers aren’t willing to invest that much time and money in an older car. And provided they’re able to buy a replacement pack that matches the original one sold in the car when new, we suspect the majority of plug-in owners will be happy.

Just as successive generations of internal combustion engine vehicles improve their emissions or fuel economy, so too will electric vehicles improve their range and battery life.

We just need to understand that just as engine transplants are rare these days in modern cars, so too are battery swaps.


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  • thecavedweller

    Yep! That all makes sense to me.

  • Naturenut99

    Completely agree. Nothing to argue with at all.

  • Surya

    Your article makes complete sense, yet before I bought my ZOE, Renault had officially announced on at least 2 occasions that there would be battery upgrades available in a few years and my dealer also stated this when I went to buy one. So I expect them to make good on that promise.

  • Andy Mitchell

    Wow! You’ve fallen for the manufacturers’ line big time! ‘While it might be more sustainable to extend the life of an existing
    model ten or more years after it first rolled off the production line,
    automakers know that doing so would make little financial sense. Humans
    are fickle, and we generally want the latest and greatest product.’ Rubbish – that’s what the makers of almost anything will tell you so they can sell you a new, slightly different, model of whatever. More profit, you see.

    • vdiv

      Rubbish indeed! This is a huge opportunity for them, but they are so shortsighted they can’t see beyond their crooked tailpipe.

  • Sergio Mendes

    I don’t agree with this, I’m sorry.

  • Sergio Mendes

    Lets hope third-parties will offer upgrades for the Leafs.

  • Wild

    No this article and the argument is invalid with the exception of some good points… When compared to it’s ICE vehicle manufacturers do offer replacement/upgrade/performance parts and they are profitable at doing it. Importantly Nikki you are disregarding the huge aftermarket industry, SEMA needs to be considered and it’s members will step in where the manufacturers have left off.
    A good reason why upgrades usually are not offered would be that manufacturers have not originally designed the vehicle to be easily upgraded, can they? Yes, would they? Maybe however manufacturers make a huge profit on selling replacement parts so why should they?
    In short I do expect the aftermarket industry to fill the void where manufacturers may not care to make a huge profit, and if manufacturers stop making cheap disposable vehicles or those not designed for upgradeability then consumers will readily consider them… the aftermarket will be there.

  • EMF

    One way or another there will be after market higher capacity battery packs for sale. It may not be in two or three years, but in six or seven years there will be multiple options for those who own 2016 Leafs and older EVs. After all, the car it’s self will still be in excellent shape. The rate of mechanical ware and tear on an EV is substantially lower than a ICE automobile. Just simply less moving parts.
    I read that Tesla are working on a 1 million mile life for their drive motors. This is a new automotive world, and it’s becoming apparent to many of us that the legacy auto companies are not fully tuned in yet.

  • David Galvan

    I agree that auto manufacturers are not heavily incentivized to offer battery upgrades. I wonder if any government entities would consider incentivizing by offering a rebate to people who purchase replacement/upgrade batteries for EVs (like CA’s 2500 rebate). That would increase demand and incentivize manufacturers to offer the batteries for sale.

    I do expect that third party companies will emerge to offer battery upgrade/replacement services at some point, though. Regardless of what the manufacturers do.

  • lad76

    You lay out reasons why they won’t; however, I think they should? And, in time they will have too. The problem is legacy auto companies must start thinking electric instead of mechanical; making policy based on electrons, electronics, sensors and computers, instead of gasoline and oil, smog, antifreeze and internal explosions; thinking long range instead of 3 and 4 year model year styling; and, so it goes in this new World of renewables and electric vehicles. Companies like Nissan just don’t have the vision or don’t want to deal with the problem even though the battery system is the very heart of any EV and might I add, could be an excellent profit center in the future.

    One car company gets it and surprisingly it’s BMW. They have designed and engineered their battery packs, at least the first versions in a standard form factor that will allow them to be upgraded and installed upgrades across their whole line of EVs.

  • If anything, we’d like to refurbish our own batteries. Kind of like how an engine rebuild in today’s car is still common, we’d need to keep our older cars going by swapping out bad cells with good ones. That would make more sense.

  • When talking about the Roadster battery upgrade you correctly state…..”is so costly that only a small proportion of Tesla owners are expected to purchase it.”

    So if a new upstart company can make a large engineering investment, how come large OEM’s can’t? Its not a question of what is possible, its a question of will. Tesla come out smelling like roses, the OEM’s like a dung pile.

    I suppose its up to the individual company to decide on what fragrance they want their company to project.

    Musk isn’t offering Roadster upgrades to make a huge profit (in fact he’ll lose a sizable amount of money), he’s doing it to build a brand and reputation others can only aspire to. The reasons you state why it doesn’t make sense are oddly the exact reasons why it does make sense if you want to set yourself apart from the pack.

    Product differentiation, marketing 101.

  • rational72

    My lease is up on my Leaf on October. I’ve been on the fence with what to do, purchase the car or lease another? It would be nice to build some equity, get out of the constant lease, and not to have a car payment at some point. The battery has me concerned though. My Leaf is an SEL, top of the line all with all features of a nice luxury car. Battery is supposed to be good for at least 8 years and then what? Does it really cost about 8k for a battery’s replacement? Will the cost come down come down for battery replacement? It seems like leasing another car would be the best option, but I would rather buy the car and not have a constant payment. Thoughts on how long a Leaf battery should last and replacement cost?

    • lad76

      Since you asked: I bought my Leaf in 2011, an SV without the quick charger, and must say the only thing I find wrong with it is the range, i.e., the capacity of the battery. One must plan your routes, keep your Heater and A/C off and your speed down because the range is directly proportional to how fast you drive it and in my particular case, I must also take care driving it in the hills and mountains; climbing uses up electrons rapidly. I use the car for short trips on mostly two lane roads. I’ll say one thing: if the car had a 200 mile range, I would plan to keep it forever; however, it doesn’t and Nissan has had five years to increase the range; but,all they have done is breed uncertainty for five years and now claim a 30 mile increase in the 2016 MY. And, I will say their policy of not offering upgraded batteries for their older models isn’t winning them any friends among those of us who supported their first foray into EVs. Do you believe an increase of 4 kwhs from a prior battery size of 24 kWh, after you deduct the capacity headroom, translates to 30 miles? If I were thinking of buying now, I would wait for the 200 milers and I would look all the EVs over and buy one from a maker who treats you right and whom you feel you can trust. EVs are different and if they last as some think they will, you will have it a long time and may swap batteries several time over the lifetime. One other thing; once you drive an EV, your world changes and it is very difficult putting up with the nonsense of owning ICE cars.

      • Don Davidson

        My lease is up in a few months on my 2014 plug in Prius. At that time I will purchase it so I have something to trade as a deposit on another lease on either the VOLT, BOLT or Tesla Model 3. Technology is not slowing yet to justify owning an EV. I question the resale value of my 2014 plug in Prius, but…who knows….

      • nordlyst

        To get it out of the way: If range was proportional to speed, you could get incredibly far by driving very fast!

        I agree that Nissan hasn’t taken care of first-gen LEAF buyers as well as they should. Most are presumably very happy though – Nissan continues to repeat that Leaf buyers are their most satisfied customers. This however does not change the fact that some portion of especially the early buyers have been left in a hole. Thanks to huge appreciation most of them can’t afford to get out of that hole, and with significant but not replacable-under-warranty degradation they are understandably angry at Nissan not only for not offering upgraded batteries, but not even saying anything about whether they will offer any in the future, or under what conditions they may do so.

        My hope and belief is that Nissan will eventually offer an upgrade. It hardly makes any sense today. The number of Leafs out there that are more than four years old or otherwise have significant degradation is tiny. The cars are thinly spread in many markets. Material costs for a bigger pack are high. You probably couldn’t get 200 miles yet in the physical space.

        But there are 220k cars out there and nearly all of them will be good for much longer if they do get another battery pack. By 2020 it may be possible to fit 60 kWh in the space available, and by then the cost per kWh will be much lower than now. And the number of cars that have lost so much range as to make a replacement pressing will be much bigger than now. I am not certain it will be possible for Nissan to profit much from upgrades even then, but it’s certainly a lot more likely then than it is today.

        So there are no guarantees. It would be helpful if Nissan could be more open about how it views these things. Even if it was bad news, if they said they’d have to be able to pack 100 kWh in there at a material cost of $3k to consider doing it, it would be better than their policy (even though it is common in all business) of only stating what current plans they have or don’t have. The situation for many early Leaf buyers is after all different to that of most car buyers, and I wish Nissan would acknowledge this and deviate from the business-as-usual approach for their (our; I bought my car just 14 months ago, but it is a 2012) situation.

    • Mark Claussen

      rational – recommend you join the “My Nissan Leaf” forum – a wealth of information (opinions?) on your questions concerning battery degradation – AND the possibility of a free replacement if the degradation is severe – (usually hot climates). Many on that forum have been on the same fence!

    • Don Davidson

      Until battery improvements slow, which I don’t see occurring any time soon, or until after markets begin offering battery upgrades for older EV’s, it makes no sense to purchase an EV. Continue leasing. Otherwise you will own an EV that “only” goes 100 miles per charge, that has minimal resale value when new EV’S get 2 or 3 times the range. Compare this to desktop computer development. 15 years ago you’d purchase a new computer, the next day a newer,faster PC was available as technology wss/is moving that fast. At that time there were companies offering computer leasing options. Now computers are so inexpensive that it’s inconsequential that you trash the old PC to buy a new one or if you are capable, modify your existing computer. Will a time come that you can go to a local auto parts store and buy a replacement upgrade battery pack for your older EV? I’m sure of this.

      • nordlyst

        > Until battery improvements slow, which I don’t see occurring any time soon, or until after markets begin offering battery upgrades for older EV’s, it makes no sense to purchase an EV. Continue leasing.

        This assumes the people who lease you the car haven’t understood how it works! They are after all not leasing the car, but own it. And somehow, they make a profit.

        Unless you are prepared to argue that the only way in which leasing companies make money is because some people are stupid and buy the car following the lease (I suggest they are smart and try to price things so they ensure a profit on *every* lease), something is fundamentally flawed in your line of reasoning.

  • vdiv

    Many moons ago a buddy of mine drove a MB ML430 SUV. The transmission kept failing and after replacing it twice, MB decided to have the dealership replace it with the AMG model, all still under warranty.

    It is not without a precedent.

  • dm33

    Disagree with pretty much this entire article.

  • A battery pack consists of small cells put together in groups.
    After 8 or more years even if the companies doesn’t offer upgrade or replacement battery you can still open the battery, test the cells and replace only the dead ones or those that can’t hold much of the charge.
    Question remains: Are the companies and dealers going to offer that kind of services or only third party businesses.

    • nordlyst

      IDK, but this sounds like a really labor-intensive process. Which would make it potentially far more expensive than just replacing the whole pack and giving the used pack a second life in energy storage.

      I doubt the process could be done a per-module basis, because each module contains a large number of cells. So even though the cells individually degrade quite differently, you’d expect the modules to be similar.

      I’m far from sure, but still believe upgrades will be available for first-gen LEAF, by third parties if not by Nissan themselves. Even though the cars are thinly spread (no garage wants to learn how to do this and establish a connection with parts suppliers if they can expect one or two jobs per year) there are at least some markets where there’s enough cars to make it viable. It all depends mainly on three factors: How much useable range do you still have? How much do you gain by upgrading? How much does it cost? Clearly it will make a lot more sense five years from now than it does today, as all three factors are moving in the right direction.

  • D. Harrower

    I don’t buy it. It’s understandable that it may not be feasible for OEMs to provide upgrade options at every juncture, but surely they could also take steps to mitigate upgrade difficulty within, say, a single generation (which, at the rate batteries improve, may see several updates using the same basic form factor). Eventually, when the tech moves in a direction that mandates major alterations to maintain legacy support, they WILL have to leave the older vehicles be and move on to newer products, but most vehicles see 4 or 5 years between refreshes. Not supporting upgrades withing that period is just laziness and lack of support for your customer base.

  • Mark Claussen

    Well written, thoughtful article. Especially like your (later) comments on the shift from combustion to electrons. Thanks.

    My question is can this “shift” ever bring about standards for the “fuel tank” that allow quick “re-filling”. Producing standard 30 gallon gasoline tanks makes no sense, however, producing standard 80KWH batteries with quick change-out capabilities – technically possible, but not likely in my lifetime! Battery chemistry to allow 10-15 min full recharge – not so sure about the “technically possible”?

    • nordlyst

      Battery chemistry to allow 10-15 min recharging isn’t just possible, but happening. In fact, you could do it using today’s chemistry – just put half as many cells in series, twice as many stacks in parallel, and use a transformer between alternator and motor to up the voltage again. I’m not sure how much efficiency would suffer, but presumably not much since electricity is transformed many times on it’s way to your socket. I also don’t know how much weight or cost it would add; there’s probably a reason they’ve settled on the 350-400V packs that they all use.

      Anyway, I don’t think this is a big challenge. For a given chemistry, the maximum charge (and discharge) rates are always relative to the pack’s total capacity, so by simply doubling the capacity you also double the rates. My LEAF with its tiny 24 kWh pack can accept up to 50 kW and delivers up to 80 kW (although I believe the short-term peak power the pack could deliver, if the power electronics could hanlde it, is 200 kW!), so if I had 100 kWh with the same chemistry the same relative rate would be over 200 kW.

      Since packs are getting bigger and internal resistance is falling I think 300 kW will be achieved within a decade. The larger the packs, the less often we’ll actually need to recharge them and the faster it will be to do so. For me, the nearly-here 200 mile generation of EVs are probably good enough to make charging times a total non-issue for me. (Then again it has only been an issue two or three times in the year I have been an EV driver. Just as often I’ve charged more than I needed to because I took a little longer in the supermarket than I expected to!)

  • windbourne

    The reason why Tesla did this, and nissan will do it, is that they manufacture their own batteries. Nearly all the rest of the companies do NOT make their own batteries, so they gain very little in upkeeping their cars for more than 8 years. Basically, Tesla wants you to keep your car and continue to pay them 60/month for maintenance,
    while others like GM, Ford, BMW, Audi, Lexus, Honda, etc want you to spend $30-100+K every 8 years, which is a lot more profitable.

    • nordlyst

      Why does BMW offer it then – on their three-year-old EV?!?

      I think Nissan will do it eventually. If not, they will simply be saying goodbye to revenue and make their customers unhappy. LEAF owners will very likely have some third-party options unless Nissan themselves offer something.

      The timing just isn’t right yet. EV sales are tiny, and were smaller still five years ago. You need either lots of cars with severely compromised range, or a huge boost to the range, or a low price, in order to get tens of thousands of people to buy the upgrade. As time goes by, all three variables are changing in the right direction.

      Just to throw around some numbers that seem plausible to me: By 2020 it may well be possible to offer a replacement pack for first-gen LEAF that boosts range to about 200 miles EPA at a material cost below $5k. Say labor and sales overhead add to $3k and that the value of your remaining capacity (which will get a second life in grid storage, for example) is $2k, and you’d be able to make a profit at a price of $6,500.

      • windbourne

        BMW is following Tesla’s lead and taking the old batteries and packaging them as home storage, which the German gov is subsidizing. So, it allows BMW to make multiple profits off the same battery pack.

  • nordlyst

    I have to say that although I agree that battery pack upgrades make little sense *today*, I find this article disingenious.

    The comparison to engines was especially disingenious. First, the technical requirements to make a “backwards-compatible engine” versus a battery pack are VERY DIFFERENT. But more importantly, nobody had any reason to expect engines to be 50-100% better in 5 years. Above all, they are not expected to REQUIRE replacement in 10 years. For battery packs the situation has been, and continues to be, exactly the reverse! EVERYBODY knew they would become much better and cheaper very quickly, and they were widely expected to REQUIRE a replacement long before the other components of the car are worne out. It is therefore entirely reasonable to expect auto makers to engineer with a future replacement in mind. That is not at all the case for ICE engines, especially because they are expected to last as long as the rest of the car.

    Really what we find here is a long list of excuses and no real explanation. I believe the reason is that, just like me, the author doesn’t really know of any good *technical* reasons why it should be difficult AT ALL to engineer a new battery pack with improved chemistry and higher energy density to replace an existing one.

    It is true that a new chemistry *could* require changes beyond the battery pack, even hardware changes. But it seems to me incredibly unlikely. Since all battery packs consist of many stacks-in-parallel of cells-in-series, even cells with a very different voltage per cell can be used to make basically an equivalent pack by adjusting how many cells are connected in series in each stack. The voltage of a pack varies in a fairly wide window, typically 350-400V, so the charger and power electronics all have to deal with voltage variations already. A totally different chemistry would only present a problem if it widened that window, as far as I can understand. In the case of a tweaked li-ion chemistry, such as in the Tesla upgrade, this simply isn’t an issue at all.

    The author claims that the Roadster 3.0 upgrade required changes to be made beyond just the battery pack. I want to know what those changes are and what would supposedly happen if you just changed the pack. The only thing I can imagine might be required is a software update relating to charging and range estimations – and this would be basically a matter of changing one variable value while retaining the same logic as before. I’m reasonably sure nothing more could possibly be necessary, since the new pack uses 3.7V li-ion cells just like the old one did.

    Actually, the Roadster upgrade is the best evidence we could ask for that development costs simply cannot be very high. Let’s use what we know here to establish a ceiling for how much developing this upgrade can possibly have cost.

    Let’s begin by estimating the cost of the parts. The upgraded pack is “roughly 70kWh” according to Tesla. Using a size of 65 kWh and a cost of $150/kWh brings the material cost estimate to $9,750. Say $9k to keep it simple.

    Next is labor. Tesla themselves say the upgrade is so expensive because the packs are made in such tiny volumes that each is assembled by hand. They also chose to replace the power electronics module when you upgrade, which I believe is to improve power and retain performance (the new pack is heavier than the original), and not something that is technically required (although it may be a good idea for the Roadster; it adds cost, but also value), which of course means some additional labor. Labor cost will also vary quite a lot depending on the customer’s location – here in Norway, for example, both wages and taxes are high and the labor cost would be significantly higher than in Germany or the US. But let’s low-ball the labor cost estimate, so that we can be confident we are establishing a *ceiling* for the development costs, which is what we’re trying to figure out. Therefore, say the labor cost is just $6000. Given that the packs are 2-3 per week and almost entirely hand-built, we can be quite sure this is a low estimate.

    Let us then ignore the various other costs relating to the upgrade (changing web pages, processing orders, coordinating with service centers and so on) and pretend the rest of the $29k is all to cover the development of the pack. That is, $29k price minus $9k parts and $6k labor = $14k development cost.

    I think it is fair to say that this is an undeniable ceiling for the development cost – unless you want to argue that Tesla willfully planned this update intending to lose money on it. What Tesla says is that they intend to make no money off it, but they don’t say anywhere that it isn’t supposed to break even.

    Now the important point: Development cost is 100% unrelated to the number of upgrades that are actually performed. Every dollar spent would need to be spent whether you upgraded 20 cars or one million cars.

    I don’t know how many Roadsters were upgraded, but we do know that it is a TINY number. So by simply saying “what if you upgraded 100 times as many vehicles?” we see that *development* cost, per battery pack, would contribute a MAXIMUM of $140 dollars to the cost of a pack in this case! Even at just ten times the Roadster upgrade volume, the development cost is at most $1400, and probably much less, or less than 5% of the cost.

    In other words, all the repetetive claims in this article about the very high cost of engineering a replacement pack is BOGUS. As soon as the volume reaches a few thousand vehicles, the cost of engineering the pack very quickly pales to insignificance in comparison to both material and labor costs.

    A more interesting question is what sort of volume is required before it becomes more economical to use the same automated production techniques for making replacement packs as is used to make the “standard” packs that go into new vehicles. This number may be much higher than just a couple thousand – you may need to allocate a big part of a production line for the purpose, for all I know.

    Labor is probably always going to be expensive. The batteries will continue to improve with both energy density and cost per kWh. There are very few battery packs out there that are more than four years old, because EV volumes are still tiny and were much smaller still five years ago. Hence it is no surprise that it makes little economic sense to offer replacements today.

    Upgraded packs for the first-gen LEAF may begin to make sense a few years from now – say, in 2020. By then tens of thousands of the cars will have lost significant range, and a new pack of 50-60 kWh may well be possible at a material cost of about $5000 ($100/kWh). If a first-gen LEAF can be boosted to 200 miles or more in 2020 for a cost of about $6500, I rekcon it will be worth doing for many. But it doesn’t look like a wonderful business for Nissan – just a way to make owners happy without making much direct profit.

    For a car like the Model 3, a battery upgrade seven to ten years down the line may also make sense. If Tesla manages to get near the sort of volumes they are projecting, we’re talking about ~900k cars made before 2020. Whatever turns out to be the case, it is NOT the “high cost of engineering the upgrade” that will prevent it. If anything, I think the main reason upgrades may not happen is that most people will find they don’t need more range than their Model 3 offers, even after a decade of use.

    To conclude, I don’t claim to know whether upgrades will make sense in the future or not, but the premise of this article, that it is the high cost and technical difficulty in engineering them that stands in the way is completely wrong. Development cost per pack is high for the Roadster, but almost nothing for a LEAF and even less for future EVs which will hopefully sell in far greater volumes.

  • Joe

    This article has it all wrong. This article is concentrating on the business, not the consumer. Businesses which concentrate on themselves and don’t put the customers needs and desires before anything else will fail. It’s 2016. The first car company to provide upgrades, like video games, will dominate.

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