On June 26, it was reported that Tesla is considering halting the production of 4680 batteries at its GigaTexas factory in Texas due to unsatisfactory energy density, charging performance, and higher costs. If cost reductions do not meet expectations by the end of the year, Tesla will abandon the production of 4680 batteries and instead procure them from external suppliers.
Tesla's 4680 battery
Tesla first introduced the 4680 cylindrical battery at Battery Day on September 22, 2020. This battery, which measures 80mm in height and 46mm in diameter, boasts a fivefold increase in energy density, a 16% increase in range, and a 14% reduction in cost compared to traditional lithium batteries.
The 4680 battery employs a module-less design that reduces the difficulty of battery thermal management by using fewer cells. Additionally, its laser-welded tabless design lowers internal resistance while improving thermal stability.
A research report from China International Capital Corporation (CICC) indicated that as manufacturing processes improve and production lines stabilize, the yield rate of 4680 batteries is expected to continuously increase. The large cylindrical battery design is anticipated to gradually permeate other automakers from Tesla. It is estimated that by 2025, the total installed capacity of 4680 and other large cylindrical batteries could exceed 180GWh, accounting for approximately 12.2% of the total installed capacity of power batteries.
Since 2023, the mass production of 4680 cylindrical batteries has seen continuous progress:
In January 2023, Tesla produced 1 million 4680 battery cells.
In June 2023, Tesla produced 10 million 4680 battery cells.
On October 11, 2023, the 20 millionth 4680 battery rolled off the production line at Tesla's Texas factory.
On June 6 this year, Tesla announced that its Gigafactory in Austin, Texas (GigaTexas) had produced 50 million 4680 batteries.
Over the past year, Tesla's 4680 battery production has significantly increased, reaching a cumulative total of 40 million units, averaging nearly 1 million units per week.
In January this year, after Tesla released its Q4 2023 and full-year financial reports, CEO Elon Musk and executives addressed investor concerns regarding the 4680 battery. They mentioned that the 4680 cells are currently ramping up, with a few weeks' worth of production inventory. New production and assembly lines are also being constructed. The year 2024 is expected to be a significant year for the growth of Tesla's 4680 battery production capacity.
In April this year, Tesla updated the project's progress while announcing its Q1 2024 financial results. Tesla's Vice President of Vehicle Engineering, Lars Moravy, stated, "The production of 4680 batteries has increased by about 18% to 20% compared to Q4 last year, sufficient to meet the demand for Cybertruck, which has an annual demand of about 7GWh. It is expected that the second quarter will also continue to outpace Cybertruck's capacity ramp-up speed. As capacity ramps up, with the improvement in production yield and increase in output, the unit manufacturing cost (COGS) is also rapidly decreasing."
4680 batteries have technical, cost bottlenecks
Given the increasing production capacity, why is Tesla still considering abandoning the 4680 battery?
Previously, media reported that as a core component of Tesla's strategy to reduce manufacturing costs through technology, Elon Musk claimed as early as 2020 that the 4680 battery could reduce battery costs by 50%, provided Tesla could overcome the challenges of dry electrode processing for both the cathode and anode.
However, as of March this year, the annual production capacity of 4680 batteries was only enough to equip 60,000 Cybertrucks, and costs remained higher than expected. Tesla still could not mass-produce dry electrodes.
Additionally, at the beginning of this year, Tesla's management set a clear assessment standard: by the end of this year, the cost of Tesla's self-produced 4680 batteries must be lower than those of suppliers like LG and Panasonic.
However, in the nearly four years since the 4680 battery was unveiled in 2020 and began mass production at the end of 2023, companies like CATL and BYD have reduced battery costs to RMB 0.4/Wh. Even if Tesla meets its cost reduction target by the end of this year, according to multiple engineers and industry insiders, the cost of 4680 batteries may still range between RMB 0.8-1/Wh, which is twice that of CATL and BYD batteries. Moreover, the safety, cycle life, and charging speed of this battery are weaker than mainstream batteries.
At Tesla's 2024 shareholders meeting held this June, when discussing Tesla's 4680 battery project, Musk stated that the project is progressing steadily and that every Cybertruck on the road is already equipped with 4680 batteries. However, he also admitted that the 4680 battery project faces considerable challenges.
Tesla strengthens cooperation with Chinese companies
Under pressure, Tesla is also considering procuring more batteries from external suppliers, especially Chinese companies.
Previously, media revealed that starting from the second half of 2023, Tesla began purchasing positive electrode rolls (components of battery cells) from two second-tier Chinese battery companies and transporting them to its Texas factory to produce 4680 batteries. These two companies were selected by Tesla after reviewing several cylindrical battery production lines of Chinese power battery companies last year. Positive electrode rolls account for about 35% of the total cost of the cell. This practice of purchasing electrode rolls from China and then making batteries may continue until the third quarter of this year.
A person close to Tesla mentioned that Tesla's battery supplier Panasonic will only start mass-producing 4680 batteries in the third quarter of this year.
In March this year, foreign media reported that Tesla was looking for materials suppliers in China and South Korea to help reduce the cost and improve the energy density of its latest 4680 battery. Meanwhile, the company was working to resolve performance and production issues related to the 4680 battery, which had previously delayed the launch of the Cybertruck.
It is reported that Tesla has sought cooperation with Chinese companies Ningbo Ronbay New Energy Technology Co., Ltd., and Suzhou Dongshan Precision Manufacturing Co., Ltd. to help reduce material costs. Currently, Tesla is increasing the production of 4680 batteries.
If Tesla can resolve the performance and process issues of the 4680 battery and achieve its ambitious production goals, the 4680 battery could ultimately be a key to Musk's dream of producing 20 million cars annually by 2030.
In summary, many Chinese battery companies, such as CATL, BAK Battery, EVE Energy, CALB, and REPT, are all involved in 4680 battery development. It is expected that more Chinese companies will appear on Tesla's list of battery suppliers in the future!
Source：Battery CBU
