Photo: Tesla
During 2021 Battery Day, Elon Musk spoke enthusiastically about a new type of battery cell that would revolutionize EV manufacturing. Three years later, the 4680 cells are still not up to snuff, and Musk admitted during this year's shareholder meeting that it's cheaper to buy batteries from external suppliers. Musk said nothing about the performance advancements he promised in 2021.
When Tesla revealed the 4680 battery cells during 2021 Battery Day, Elon Musk promised these cells would bring important benefits. Thanks to a revolutionary process called dry battery electrode (DBE), the new cells would be much cheaper and easier to manufacture, cutting a few energy and time-consuming steps from the manufacturing process. The bigger cells also promised more power and energy density, but soon, they proved a tough nut to crack for Tesla.
The first generation of cells in the Austin-made Model Y had a disappointing charging performance. This means the 4680-cell Model Y is not the best EV for road trips because you would have to spend more time charging. The second generation of the 4680 cells did no better for the Cybertruck. Tesla's electric pickup was also criticized for its charging performance.
Tesla invested a lot of effort into advancing the 4680 cell technology, which it considered existential for its many projects, including the Optimus humanoid robot. However, the development hit a wall, and the promised advantages of the 4680 cells failed to materialize. Despite production ramping up at Giga Texas, Tesla has few incentives to increase it further. The 4680 cells are more expensive to produce and offer no benefit over the 2170 cells Tesla buys from Panasonic and LGES.
Tesla admitted as much during the first-quarter earnings call when VP of Engineering Lars Moravy revealed that Tesla's goal is to beat the supplier cost of nickel-based cells by the end of the year. In other words, 4680 cells are still more expensive than the 2170 cells Panasonic produces for Tesla in Nevada, let alone cells imported from China.
Asked about the 4680 cell project during the annual shareholder meeting, Musk avoided a direct answer. Instead, he said that suppliers drastically lowered the prices of their batteries. Musk repeated what Moravy said in April, that Tesla aims for cost parity with third-party suppliers by the end of the year. However, for now, Tesla prefers to buy cells from external sources, which are cheaper and reportedly better.
Musk's answer regarding 4680 cells sounded like he regretted having wasted all these resources on a product that didn't yield the expected results. Musk said that 4680 cells will become the most competitive cell from a manufacturing efficiency standpoint, but he said this before. Rumors indicated that Musk might ditch the 4680 team altogether if it doesn't provide the announced cost reduction by the end of the year.
Tesla is still heavily invested in vertically integrating battery production. The cathode factory and lithium refinery Tesla builds in Texas will provide resilience if there are unwanted changes in the supply chains or the geopolitical situation. Local battery production in the US also enables Tesla to benefit from important federal incentives amounting to thousands of dollars per vehicle.
The first generation of cells in the Austin-made Model Y had a disappointing charging performance. This means the 4680-cell Model Y is not the best EV for road trips because you would have to spend more time charging. The second generation of the 4680 cells did no better for the Cybertruck. Tesla's electric pickup was also criticized for its charging performance.
Tesla invested a lot of effort into advancing the 4680 cell technology, which it considered existential for its many projects, including the Optimus humanoid robot. However, the development hit a wall, and the promised advantages of the 4680 cells failed to materialize. Despite production ramping up at Giga Texas, Tesla has few incentives to increase it further. The 4680 cells are more expensive to produce and offer no benefit over the 2170 cells Tesla buys from Panasonic and LGES.
Tesla admitted as much during the first-quarter earnings call when VP of Engineering Lars Moravy revealed that Tesla's goal is to beat the supplier cost of nickel-based cells by the end of the year. In other words, 4680 cells are still more expensive than the 2170 cells Panasonic produces for Tesla in Nevada, let alone cells imported from China.
Asked about the 4680 cell project during the annual shareholder meeting, Musk avoided a direct answer. Instead, he said that suppliers drastically lowered the prices of their batteries. Musk repeated what Moravy said in April, that Tesla aims for cost parity with third-party suppliers by the end of the year. However, for now, Tesla prefers to buy cells from external sources, which are cheaper and reportedly better.
Musk's answer regarding 4680 cells sounded like he regretted having wasted all these resources on a product that didn't yield the expected results. Musk said that 4680 cells will become the most competitive cell from a manufacturing efficiency standpoint, but he said this before. Rumors indicated that Musk might ditch the 4680 team altogether if it doesn't provide the announced cost reduction by the end of the year.
Tesla is still heavily invested in vertically integrating battery production. The cathode factory and lithium refinery Tesla builds in Texas will provide resilience if there are unwanted changes in the supply chains or the geopolitical situation. Local battery production in the US also enables Tesla to benefit from important federal incentives amounting to thousands of dollars per vehicle.
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