Key Takeaways
1. Tesla claims to have achieved the lowest cost per kWh for its 4680 battery, primarily in comparison to its own suppliers.
2. The transition to in-house production of the 4680 battery marked a significant improvement for Tesla, moving away from reliance on suppliers like LG and Panasonic.
3. Future expectations indicate that significant milestones in battery manufacturing cost efficiency are anticipated by 2025, particularly with the ramp-up of dry battery electrode production.
4. Tesla’s development of a lithium refinery in the U.S. suggests ongoing cost reductions for the 4680 battery, though the impact of tax credits is still uncertain.
5. The dry cathode production method’s effects on manufacturing costs and charging performance remain unclear, with some concerns about thermal efficiency compared to competitors.
Tesla has reached a point where it can produce its cylindrical 4680 battery at the most economical cost per kWh, indeed.
This statement was initially made by Elon Musk during a company-wide meeting last month, although he didn’t provide many specifics. Recently, it was also verified by Tesla’s Director of Cell Manufacturing, who offered some additional information.
Clarification on Cost Claims
It appears that when Elon Musk referred to the lowest cost per kWh, he was talking about Tesla’s battery suppliers, not the cheapest EV battery cell in the entire world. That recognition likely goes to one of the major Chinese battery manufacturers, CATL or BYD. Nevertheless, what Tesla has accomplished with its 4680 battery optimizations is definitely noteworthy.
The company transitioned from nearly giving up and relying on suppliers like LG or Panasonic for 4680 cells to becoming the producer of the most affordable battery it uses in under a year. During the presentation, Elon Musk humorously mentioned, “Please don’t make us do the anode, too,” alluding to the more cost-effective dry cathode method that Tesla has now mastered and is rapidly increasing production of to further reduce 4680 cell costs per kWh.
Future Expectations
Michael Guilfoy, Tesla’s Director of Cell Manufacturing, expressed confidence that “2025 will see significant milestones with fully ramped dry battery electrode manufacturing to provide even more cost efficiency.” He also took a moment to appreciate the team for their outstanding accomplishment.
Tesla is also developing its own lithium refinery in the United States, which suggests that the costs of the 4680 battery are likely on a downward trajectory. However, it’s still uncertain whether Tesla’s achievement of the lowest battery cost per kWh is due to the production of the 4680 cells or the federal tax credits for domestically made batteries, as outlined in the Inflation Reduction Act.
Uncertain Impact of Production Methods
Moreover, it is still ambiguous whether the dry cathode production method will only revolutionize manufacturing costs or if it will also enhance the charging performance for the Cybertruck and other vehicles using the 4680 cells.
A recent teardown compared the 4680 battery with BYD cells and revealed lower thermal efficiency, which contributed to charging issues that do not match the speed suggested by the Cybertruck’s 800V system.
Once Tesla scales up the production of the dry 4680 battery cathode, it is expected to release the much-anticipated cheapest Cybertruck RWD version, which has already been listed as an eligible trim on the federal tax credit website.
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