Now is the crunch time for Tesla Inc., where Elon Musk is looking to crack the code to make better, cheaper batteries.
The electric carmaker is recruiting material suppliers in China and South Korea to help reduce costs and increase the power of its latest batteries, even as it grapples with battery-related performance and production issues that have helped delay its future Pai Cybertruck’s launch, according to people familiar with the plan.
Tesla has hired China’s Ningbo Rongbai New Energy and Suzhou Dongshan Precision Manufacturing Co to help cut material costs as it ramps up production of its 4680 cells in the U.S., the sources said, speaking on condition of anonymity.
Details of these arrangements have not been previously reported.
The 4680 could end up being the key to CEO Musk’s dream of producing 20 million vehicles a year if the Austin, Texas-based electric carmaker can address performance and craftsmanship issues and meet its ambitious production goals. — not a bottleneck. 2030.
Tesla and Musk could not be reached for comment.
As part of its efforts, Tesla also signed a deal with South Korea’s L&F Co to supply high-nickel cathodes, which could increase the energy density of its 4680 batteries, one of the sources said.
The automaker aims to boost its own production through South Korea’s LG Energy Solution and Japan’s Panasonic’s 4680 batteries — an insurance policy to secure future EV production, two sources said. LG and Panasonic are expected to supply batteries for the Cybertruck, one of the sources said.
The battery shortage means “a shutdown of factories,” Musk told investors in early March.
The new batteries are expected to play a key role in the avant-garde stainless steel Cybertruck due later this year, the company’s first new model in more than three years.
Tesla had considered three battery options to ensure that the launch would not be delayed again: the smaller 2170 battery, the 4680 battery, and the cheaper lithium iron phosphate battery that are widely used in other Tesla models, but the electric car makes a huge difference. Vendors tend to wait until the 4680 cells are ready, the sources said.
Details about Tesla’s Cybertruck battery strategy, including using 4680 cells and considering other options, have yet to be reported.
In 2022, Musk said he doesn’t expect the 4680 battery to be “a limiting factor for the Cybertruck or anything else.”
Tesla’s design of the 4680 battery — named for its external dimensions (46mm in diameter and 80mm in length) — is critical to future production plans. Tesla intends to build versions at plants in Texas, California, Nevada and Berlin for vehicles ranging from the Model Y to the Cybertruck, the sources said.
But Musk acknowledged at Tesla’s investor day on March 1 that Tesla is still working to ramp up the first wave of production.
“Tesla’s impact is underestimated”
Despite the immediate problems, some analysts remain optimistic that Tesla will address them.
“While execution risks remain and many details are unknown, Tesla’s impact on the global battery industry may still be underestimated,” Morgan Stanley said after the investor day.
Musk first announced the new battery on Battery Day in September 2020. At that event, he promised to reduce battery costs by 50 percent through a series of innovations, from larger cell sizes to a new “dry” electrode coating process that could significantly reduce the size and cost of battery factories while improving battery performance.
Repeated delays in moving the new battery from the initial prototype stage to full-scale production have also delayed the launch of the long-awaited Cybertruck, which aims to take advantage of the battery’s potential improvements in energy density and power — progress that has yet to materialize. .
But it will take time for suppliers to ramp up production.
Panasonic is trial-running the 4680 line at its Wakayama plant in Japan and plans to start mass production later in the fiscal year that ends in March 2024.
Panasonic Energy Chief Technology Officer Shoichiro Watanabe said last month that the company’s new Kansas battery factory will initially focus on 2170 cells, but will eventually shift production of 4680 cells to North America.
Last year, LG said it planned to open a new 4680 production line at its Ochang plant in South Korea in the second half of 2023.
Tesla’s first-generation 4680 cells, produced at its factory in Fremont, California, failed to meet energy density targets, the people said.
So far, the automaker has been able to dry-coat the anode (the negative electrode), but is still having issues dry-coating the cathode, which is expected to see the most significant gains, the sources said. .
So far, Tesla has tried to ramp up production of its dry-coating process, but has only been able to produce batteries for about 50,000 cars a year, Musk and company executives said.
Musk said Tesla will have enough 4680 internal capacity to supply 1.3 million Model Ys by 2020.
While executives said Tesla seemed likely to quintuple production of the 4680 by the end of the year, the company was hedging.
Musk is betting that if Tesla ends up having too many batteries this year, that’s a good question. It could use these for energy storage systems it sells to utilities and consumers.
Tesla also installed first-generation 4680 cells with “wet” cathodes in the so-called structural packs of the Texas-built Model Y. Most of these vehicles use older 2170 batteries.
Tesla plans to use cathodes with more than 90 percent nickel in its next-generation 4680 batteries, two sources said. L&F is expected to be one of the suppliers of the high-nickel cathode, another source said.
(Reporting by Zoey Zhang in China and Hyunjoo Jin in San Francisco; Additional reporting by Norihiko Shirouzu in Austin, Texas and Daniel Leussink in Tokyo Additional reporting by Paul Lienert in Detroit Editing by Ben Klayman and Matthew Lewis)
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