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Tesla’s Cobalt Blues; Spin, Fake News Or Deception?

By Kurt Osterberg · On August 6, 2018

“Spin” is a form of propaganda that relies on a biased interpretation of fact to influence opinion.

“Fake News” is a more dishonest form of propaganda that relies on a combination of fact and falsehood to influence opinion.

“Deception” is an even more dishonest form of propaganda that principally relies on falsehood to influence opinion.

Depending on the reader’s sophistication, the cobalt discussions in Tesla’s Q1-18 earnings letter could be fairly characterized as spin or fake news, or even deception.

None of the possible characterizations speak well of public company that has a legal duty to provide full and fair disclosure of all material facts.

In its 2018 First Quarter Update, Tesla (TSLA) said:

“Cells used in Model 3 are the highest energy density cells used in any electric vehicle. We have achieved this by significantly reducing cobalt content per battery pack while increasing nickel content and still maintaining superior thermal stability. The cobalt content of our Nickel-Cobalt-Aluminum cathode chemistry is already lower than next-generation cathodes that will be made by other cell producers with a Nickel-Manganese-Cobalt ratio of 8:1:1.”

While I initially viewed the claims a creative revision of Tesla’s battery chemistry history, I had major surgery the next day and didn’t feel up to preparing a written analysis until recently. So, while this article not as timely as I’d like, I think it offers a fascinating glimpse into the mind of the world’s greatest stock promoter.

Tesla Does Not Make Lithium-ion Cells

Tesla does not make lithium-ion cells or own significant cell manufacturing technology. Instead, it buys finished cells from Panasonic (PCRFF), which developed its high-energy lithium-nickel-cobalt-aluminum, or NCA, chemistry in partnership with Sumitomo Metal Mining (SMMYY). When Panasonic delivers finished cells to Tesla, the finished cells are assembled into battery packs by Tesla employees.

Whenever Tesla makes claims relating to the energy density of cells, the materials used in cells and the performance characteristics of cells, it is taking unmerited credit for development work that Panasonic and Sumitomo finished while Tesla was building Roadster prototypes.

Tesla’s Battery Technology History

Prototypes of Tesla’s Roadster EV were revealed to the public in July 2006, four years prior to its IPO in July 2010. The first 109 Roadsters were delivered to customers in 2008.The two-seater weighed 1,305 kg, was powered by a 53-kWh lithium-ion battery pack and had an EPA estimated range of 244-miles. According to Tesla’s Emergency Responder Guide, the battery pack was built using Lithium Cobalt Oxide, or “LCO,” cells.

LCO cells have a specific energy of ~200 wh/kg, so one kilowatt hour, or kWh, of cells weighs about 5 kg. The LiCoO₂ cathode powder used to manufacture LCO cells is roughly 60% cobalt by weight. Since cathode powder weight typically represents 40% of cell weight, the Roadster used roughly 2.0 kg of cathode powder and 1.2 kg of cobalt per kWh of battery capacity.