When Is The Tesla Battery Revolution Really Coming?

At the time of Tesla’s last Battery Day in September last year, two announcements caught people’s attention. The biggest fuss was made about the hint that Tesla would have a $25,000 car in just a few years’ time. But the more immediate news was the announcement of a new cell type called the 4680, due in volume in 2021. This cell is more than twice the diameter of the 2170-type currently used in most Tesla cars, and 10mm longer. Musk claimed it would offer Tesla cars 16% more range, deliver six times the power, and cost 14% less per kWh. However, the new technology has been having problems.

At the Battery Day in September 2020, Musk claimed that by September 2021 Tesla would hit around 10GWh capacity producing the new cells. However, in 2020 the production yield was a paltry 20%. That is not so surprising, because this is not just a switch to a larger cell with the same technology. The new cell is “tabless”, it is meant to involve “dry” electrode production that drastically reduces the number of stages in manufacturing, as well as using different materials for the anodes and cathodes.

The meatier batteries will also become part of the car’s structure, allowing Tesla to remove chassis elements used purely to provide a stiff casing for the cells, saving car weight and maximizing the space available. All of these developments would eventually allow Tesla to reduce battery costs by 56% per kWh, which would have a considerable impact on car pricing at the budget end of the market and enable vehicles with much longer range for current premium prices.

When Elon Musk cancelled the Tesla Model S Plaid+, he argued that the Plaid was “fast enough”. However, another theory is that, because the Plaid+ promised 520 miles of range, this necessitated the 4680 cells being available in quantity, which they just aren’t yet. The arrival of the Cybertruck and Semi are apparently being delayed to 2022 by the slow ramping up of 4680 cell production, too, and the Tesla Model Y cars from Tesla’s factories in Berlin and Texas will continue to use the 2170 cells for the time being. They were supposed to be switching to the 4680.

In April, Musk said that reliable 4680 volume was 12-18 months away, which would push this close to 2023. However, at Battery Day 2020, Musk was promising 100GWh of production by 2022, which was clearly beyond optimistic. Fortunately, it appears things have improved recently, with production yields now at 70-80%, according to YouTube channel Hyperchange’s Galileo Russell. In typical Tesla fashion, the technological promise remains but the timescale has slipped considerably. In 2017, Tesla Model 3 production was a shocking 84% behind what Musk had originally promised. Earlier in August this year, there were further admissions of delivery delays.

This is nothing new from Tesla, then. But alongside the problems with chip supply that are affecting car sales worldwide, electric vehicles will suffer from a situation where battery demand just can’t be met with sufficient shipped units. In fact, battery supply could be the biggest hindrance to the widespread adoption of electric vehicles. EV-volumes has recently stated that global sales were up by 168% in the first half of 2021 compared to the first half of 2020. In order to maintain this exponential growth, which would imply around 8.5 million new EV sales in 2021 and could entail over 20 million in 2022, there will need to be a concomitant increase in battery production. In fact, as cars arrive with bigger batteries for more range, the hunger for batteries will grow even faster than unit vehicle sales.

This is why it is essential that Tesla rapidly solve the problems it has been having with its 4680 cell. Its next set of vehicle enhancements and new vehicles – including the Cybertruck, Semi and mysterious $25,000 “Model 2” – all depend on this technology, and it will face increasingly stiff competition. Some Chinese companies supplying e-buses were already hitting the magic $100 per kWh pack price at the end of 2020. Tesla is not the only company innovating in battery technology, and the sleeping giants of European car manufacturing have awoken, to refocus on EVs, including Volkswagen and Stellantis. These companies are also working with local European battery suppliers.

The promise of the 4680 cell is considerable, and it’s clearly not easy technology to perfect. It will be another step change in EV capabilities when it arrives in volume. Right now, though, that is looking like it will be at least 12 months later than originally promised this time last year. It end up being even further delayed.