Elon Musk: Tesla’s 4680 Batteries At Price Parity With Least expensive Suppliers’ By Finish Of 12 months

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There have been a few segments of Tesla’s 2024 annual shareholder assembly that stood out to me as significantly attention-grabbing on the subject of Tesla battery manufacturing. The primary half was from Tesla’s important presentation, and I’ll begin with that. Nevertheless, the large data really got here towards the top of the assembly within the Q&A session.

To begin with, at 1:10:40, Musk states: “And we’re additionally innovating quite a bit in battery manufacturing with the 4680 that’s constructed proper right here. It’s — it’s a tough drawback, you already know, like there are whole corporations that simply make battery cells. That’s all they do. However we’re making good progress. All of the Cybertrucks that you just see use the 4680 cell. And we now have a transparent path to the 4680 being, we expect, most likely probably the most aggressive cell from a producing effectivity standpoint.”

Properly, that’s a giant assertion there already — Elon Musk thinks Tesla’s 4680 battery cell can grow to be probably the most aggressive battery cell on the market when it comes to manufacturing effectivity, which one presumes would assist it when it comes to cost-competitiveness as properly. This assertion is mainly the teaser that led to the query on the finish of the assembly, however let’s preserve happening what was mentioned in the principle presentation first.

“However it’s, it’s a exhausting drawback, I’ve to say. There’s various mind injury that’s required to be good at cell manufacturing. Hahaha. It’s like a mind injury excessive. Hehehe. However I believe it does — it does give Tesla resilience if there are modifications within the, I don’t know, geopolitical scenario, one way or the other. Haha. Nevertheless it’s good to have some independence in cell manufacturing.”

Certainly, one wouldn’t wish to be underneath the thumb of China an excessive amount of if geopolitical points between the US and China heated up. Tesla’s battery provide from China might then dry up. Certainly, that is one essential purpose for necessities within the Inflation Discount Act of 2022 that Democrats and Joe Biden handed and signed into regulation that intention to make US automakers and the US financial system much less depending on Chinese language batteries and battery supplies.

“And we’re making regular progress. And we even have the cathode refinery, which you’ll see behind the principle manufacturing unit. So, you possibly can type of see within the image there. That’s the cathode refinery. After which we’ve received the lithium refinery in South Texas. So, we’re simply form of ensuring we’ve received the items of the puzzle.”

So, in brief, it’s notable and spectacular that Tesla is engaged in its personal cathode and lithium refining.

“When you had been to have a look at type of a video of how Tesla does, say, cathode and lithium refining, and the way the remainder of business does it, it’s night time and day. I imply, you possibly can type of eat off the ground within the Tesla refinery, and I’d not advocate doing so within the others.”

Wowza!

“So, it’s very — we’re undoubtedly going very vertical right here. However I believe this can be a, it’s a clever funding that may repay greater than individuals understand.”

That was it from the principle presentation — definitely attention-grabbing, however nothing groundbreaking or new.

Towards the top of the occasion, although, one questioner famous that it had been 4 years since Battery Day and requested for somewhat extra information on the 4680 battery cells and Tesla’s targets to make the battery extra inexpensive. Right here’s the place issues received attention-grabbing, after a little bit of chatter in regards to the general market. Musk notes:

“So, reaching affordability is definitely at this level, um, extra about the remainder of the automotive than it’s really in regards to the battery pack. The value per kilowatt-hour of cells from suppliers has dropped dramatically. So, there was a large spike for just a few years in the price of lithium-ion cells from suppliers as a result of each automotive producer put in gigantic orders for battery packs — like large, large orders. So the value of, like, of lithium and all of the uncooked supplies and the battery cells went loopy — it doubled. Like, the value of cells doubled. Value of lithium I believe went up, nearly like, 5-fold or like 500% — like went up loopy numbers.

“So, since then, the demand — like, battery cell suppliers have elevated their provide, and, um, the orders from different automotive producers have declined. So, I imply, it’s price noting it’s powerful sledding on the market for EVs. […]”

He then talked a bit in regards to the “sport of pennies,” decreasing numerous little prices by pennies. After which he made the statements that actually jumped out to me, so I’m going to daring this complete subsequent part.

“Now, with respect to our personal cell manufacturing, we do see a path to price parity by the top of this 12 months — a really troublesome path to price parity. At present, our 4680s price greater than our suppliers’. Now, they price greater than the suppliers’ at this time, however they price lower than the suppliers’ a 12 months in the past. So, you already know, there’s a little bit of a feast–famine factor with battery cell provide. It’s form of like for DRAM chips — you already know, like, the DRAM business goes from like oversupply to undersupply; the value of DRAM modifications like loopy. It’s form of like that for cells. Um, so, however we count on to realize price parity even with the a lot decrease provider cell worth at this time by the top of the 12 months.“

That is doubtlessly a giant deal. The reason is sensible — we’re all conscious of the boom-bust cycles of know-how and scaling up new industries. Even simply in cleantech, we’ve seen it with photo voltaic panels, wind generators, battery cells, and lithium. So, it’s comprehensible that the battery business hit a interval of oversupply and Tesla’s 4680 battery cells weren’t as aggressive because it’d been assumed they’d be. However the information that Tesla has certainly been making progress on them and driving down prices, and the corporate expects them to be price aggressive by the top of the 12 months, is definitely notable. After all, there’s the query of whether or not the large canines within the battery business (CATL, LG, SK On, and so on.) are going to proceed innovating and driving down prices sooner. However I’ve to say that I’m extra optimistic about Tesla’s battery developments from the top of this lengthy response to the query than I’ve been … since Tesla Battery Day 4 years in the past? We’ll see what occurs.