To appeal to customers, every company looks to reduce their production costs so they can make better products at a lower price. Tesla Inc is looking to do the same with their 4680 batteries. The electric vehicle company is looking to recruit Korean and Chinese material suppliers to help address 4680 battery concerns.
Tesla has recently been struggling with battery-related production and performance issues. These issues are so prevalent that the company has had to delay the launch of its Cybertruck and contact partners to address 4680 battery issues.
The 4680 batteries were unveiled at Battery Day 2020 and took the industry by storm as it claimed to reduce battery costs by half with its innovative design. The 4680s have been brought to increased production since then, but it has faced some issues along the way.
Tesla Asks Asian Partners to help solve the Dry Electrode Issue.
With the 4680 batteries causing issues for Tesla, the company has turned to its Asian partners for help. Reportedly, Tesla tapped China's Ningbo Ronbay New Energy and Suzhou Dongshan Precision Manufacturing to help their energy storage systems and reduce materials costs. Using their Asian partners to address the dry electrode issue was especially necessary as the company planned to ramp up the production of batteries.
These batteries, which were expected to power many future Tesla models, have become a roadblock. Previously, the company was highly ambitious and believed that the 4680 could help the CEO, Musk, reach his aim of building 20 million vehicles annually by 2030. However, the battery had various performance and process kinks that impeded the growth of the company.
In an effort to resolve these issues, Tesla also signed a deal with Korea's L&F Co which will supply high-nickel cathodes. A source claims these can significantly help reach the energy density target for the 4680 cells. Japan’s Panasonic and Korea’s LG Energy Solution are also expected to help Tesla secure their future electric vehicle production. The two companies will likely supply cells for Tesla’s Cybertruck, according to a source.
Tesla Gives an Update On its 4680 Battery Cell
Despite the immediate problems faced by the company, analysts are optimistic that Tesla will be able to resolve these issues. There are some execution risks, as noted by Morgan Stanley, but since many details are unknown, the industry may be underestimating Tesla.
Following the Q1 2023 financial results, Tesla held a conference call that gave a detailed update about its 4680 battery cell production. It revealed that the Tesla was part way through the building, commissioning, installing, and operating of their Texas 4680 factory. Additionally, they were also continuing to pursue investment reduction opportunities in future battery factory locations, such as Nevada.
The conference call also revealed that they had made significant improvements in production output and even reduced the costs to prepare for Cybertruck volume production. Specifically, at their Texas factory, the quarter-over-quarter increase was 50%, driven by a 12% increase in yields and a 20% increase in peak rate. In addition, there was a 20% improvement in through yields. Altogether, Tesla was able to reduce the COGS by 25% over the quarter.
Battery Day in 2020: The 4680 Battery Cells
Elon Musk, on Battery Day, announced that their 4680 battery would help unlock the hidden potential of their electric vehicles. These high energy density batteries are better than any other cylindrical battery cell in production, allowing electric cars to run longer distances. Additionally, battery manufacturing costs will also reduce dramatically by 50% or even more, resulting in affordable electric vehicles. The reason for their powerful nature is the manufacturing process, which uses the new dry electrode process, which makes them more powerful and considerably smaller.
Tesla 4680 Production Challenges
Currently, Panasonic is running a pilot 4680 production line at its Japan Wakayama factory and plans to start increased production in the latter half of the fiscal year, which ends in March 2024. The company is also reportedly building a Kansas battery plant, which is expected to focus on 2170 cells initially but will shift to 4680 cell production.
Getting the 4680 battery just right is essential for Tesla if it wants to increase the production of the Cybertruck. However, the company is making moves to make that happen, as exclusive Tesla taps Asian partners to help secure future EV production.
Cracking the issue and producing enough 4680 batteries will also help Tesla reach their goal of manufacturing 20 million electric cars a year by 2030. Achieving this goal will also require reducing the cell cost of the models, which will only be possible if they can produce 4680 dry-coated batteries at a low price for this to be profitable.
Tesla Slashes Costs of 4680 Battery Technology
In a recent development, Tesla announced that it is on track with its 4680 battery cell development and has already managed to reduce the cost of production by 25%. This is the halfway mark to the 50% cost reduction it was aiming for three years ago at Battery Day in 2020.
Tesla's Cybertruck battery strategy will now allow the planned production of the vehicle, which is due to start later this year. It is also reported that Tesla’s Texas 4680 cell factory, currently partway through commissioning, will have a 70% lower capital cost per gigawatt hour compared to typical cell factories.
In Conclusion
Tesla aimed to revolutionise the global battery industry with its 4680 batteries but ran into some issues. This led to them needing to contact Asian partners to help in boosting cell performance. The company has managed to make some headway and has managed to reduce the cost of production by 25%. However, this is just the start, as the company plans to reduce it by 50% to help achieve Musk’s aim of producing 20 million vehicles annually by 2030.
Frequently Asked Questions
Does Tesla use 4680 batteries now?
Tesla installed its first generation of 4680 cells in structural packs that were produced at the Texas factory-built Model Ys. For future versions of 4680 batteries, Tesla will reportedly produce cheaper batteries using 90 nickel.
Which Tesla cars use the 4680 battery?
Tesla’s Model Y AWD, made in Gigafactory Texas, uses 4680 cells.
How long do Tesla 4680 batteries last?
Tesla’s 4680 batteries are expected to have a range of 269 miles.
