4680 battery becomes a bottleneck: unknown factors hinder Tesla’s battery self-production plan

Beijing time on the morning of July 22, according to reports, Tesla said on Wednesday local time that it will continue to rely on suppliers to meet the demand for batteries for automotive products this year as the digestion of new technologies has affected its battery self-production plan. This indicates,Tesla falls short of CEO Elon Musk’s goal of self-manufacturing next-generation batteriesraising questions about whether Tesla can continue to significantly expand vehicle production next year and beyond.

Tesla is an outlier in the industry, the only major automaker producing its own batteries without partnering with suppliers. However, Tesla will also purchase batteries like other car manufacturers, and it is mainly some Asian companies that provide batteries for Tesla. The battery is the most expensive component in an electric vehicle, and lowering the cost of the battery is critical to driving the adoption of electric vehicles.

If Tesla succeeds, it could secure a steady supply of cheaper batteries with higher ranges, laying the groundwork for its goal of producing 20 million cars a year. Tesla needs such batteries next year, though, to avoid getting caught up in the global auto industry’s fierce competition for the battery supply chain. For example, Ford announced on Thursday that it had reached a major new agreement with domestic battery giant CATL.

Benchmark Mineral Intelligence analyst Caspar Rawles said that for Tesla, “there’s not much time left, and the end of the year deadline is approaching, which means Tesla needs to quickly resolve The problem remains to meet the required output.”

The new battery has a model number of 4680, a diameter of 46 mm and a height of 80 mm. That’s much larger than the current 2170 battery and has more energy storage to keep costs down. Tesla has also pioneered a new process for making low-cost batteries called “dry cell electrodes.”

Yesterday, Musk said on Tesla’s quarterly earnings call: “Our current focus is on solving dozens of minor issues that impacted the ramp up of 4680 battery capacity. “For dry battery electrode technology, he also said: “When something is revolutionary, there are a lot of unknowns that need to be resolved. We have the confidence to solve these unknown problems, but it is also very difficult. “But Musk stressed that Tesla is making rapid progress.

In 2020, Tesla said that by 2022, the production capacity of the 4680 battery will reach 100 gigawatts, which will be enough to supply Tesla’s new factories in Texas and Germany.

Musk said in April that a ramp-up in vehicle production early next year would be at risk if Tesla can’t fix the manufacturing of the 4680 battery. On Wednesday, he said again that 4680 batteries are important to Tesla’s 2023 goals.

Tesla senior vice president Andrew Baglino said his goal is to produce more than 1,000 4,680 cells a week by the end of this year. He did not specify whether the unit of the number was a car or a battery cell. (In actual production, 1,000 battery cells are enough to power a car.) Regardless of the algorithm, Benchmark’s Rawls says,Both numbers are well short of the vehicle production target for the Texas factory..

Baglino said Tesla’s 4680 battery test line in California has ramped up production, and Tesla aims to start producing those cells this quarter at a new factory in Texas. He did not mention the production of 4680 cells at the Berlin plant.

Evan Horetsky, a partner at McKinsey and a former Tesla executive, said the vertical integration model gives Tesla more control over the critical battery supply chain, but Tesla “also has the burden of All risks of battery production”. The question is, “Would Tesla be willing to take that risk on its own?”

Tesla does have other options. Rystad Energy analyst Abhishek Murali said: “Right now, it’s not going to affect Tesla’s sales because no one is going to say, ‘I’ll just buy a car with a 4680 battery’. “

Tesla is expanding its battery supply chain, bringing in BYD as a supplier. Meanwhile, Panasonic recently announced a plan to build a battery factory in the U.S. state of Kansas to supply batteries to Tesla. CATL, a Tesla supplier, is also choosing a site for a factory in North America.

Still, a large part of Tesla’s brand reputation and market capitalization is tied to technological progress. Cowen analyst Jeffrey Osborne said in a research note that Tesla appears to have recently struggled with new batteries and “technical” features such as self-driving. If these problems persist, “we think Tesla will be under pressure going forward, as investors are increasingly fed up with product bounces and false expectations.”