Betting on the 4680 battery, can Tesla maintain its supremacy in electric vehicles?

A year and a half after Tesla's "Battery Day", the mass production of 4680 batteries is gradually approaching.

According to the South Korean media "Business Korea" reported on February 14, Cataltime, Ewell Lithium Energy, BAK Battery and other Chinese power battery manufacturers will put into mass production of Tesla 4680 batteries this year, and at present, Ewell Lithium Energy and BAK Battery are actively expanding the plant. The report also mentioned that Panasonic's 4680 battery research and development is in the final stages, and the company will achieve mass production in Japan as soon as this year.

For Tesla, the 4680 battery will be the key to the company's success in hitting 20 million production capacity. At the "Battery Day" event held in September 2020, Tesla CEO Elon Musk said that the current market share of electric vehicles is growing, but the price of electric vehicles is still expensive, and not everyone can buy them.

Therefore, Tesla hopes to halve the cost of the battery - the realization path of halving the cost of the 4680 battery starts from five aspects, such as improving the manufacturing efficiency of new batteries, improving the efficiency of the use of battery anode and cathode materials, and the integration of electric vehicles, and finally achieving a 54% increase in mileage but a 56% reduction in battery costs, while the investment cost per kilowatt-hour of battery is reduced by 69%.

With the large-scale mass production of 4680 batteries, the company is expected to launch new models such as electric pickup truck Cyberruck, electric van Semi and new sports car Roadster next year, and even expect to include low- and mid-range models that cost only $25,000 into the production schedule.

Costs halved but range increased by 54%, and 4680 batteries were delivered as soon as the first quarter

The so-called "4680" battery, that is, a new type of battery with a diameter of 46mm and a height of 80mm, Tesla held a "Battery Day" event in 2020, and Musk announced at that time that the energy density of this new battery would increase by 5 times, the mileage would increase by 16%, and the battery power output would increase by 6 times, which could increase the mileage of Tesla's model by 54% but the battery cost would drop by 56%, thus making Tesla's model have room for price reduction.

In recent years, Tesla has repeatedly lowered the price of its models, but the company's net profit has grown rapidly year after year, thanks to the control of production costs. Tesla said that in the third quarter of 2021, the company achieved the highest operating margin of any batch OEM, and the cost per vehicle (COGS) fell to about $36,000 in the third and fourth quarters of 2021.

Different from the past way of choosing to cooperate with power battery suppliers to produce, this time on the 4680 battery, Tesla tried to produce its own battery. According to public information, Tesla has carried out mass production of 4680 batteries at its California factory in the United States, Markham, Ontario, Canada, and its Berlin plant in Germany.

Tesla said in its 2020 annual report that Tesla's current power battery suppliers include Panasonic, LG and CATL, but the company believes that battery suppliers that meet its needs are quite limited, and it is necessary for the company to create and mass-produce new batteries to improve vehicle performance and reduce production costs.

The "meet the demand" referred to here refers to the 4680 battery. Due to the immature production process, the 4680 battery has not been able to achieve large-scale mass production since its release, Musk said that the outside world may not understand the extreme difficulty of expanding the production scale of new technologies, "it is 10 times to 100 times more difficult than making some prototype products, and the machine that makes the machine is much more complex and difficult than the machine itself." ”

But Tesla is overcoming this difficulty. At his earnings call in January, Musk revealed that the Austin plant in Texas in the fourth quarter of last year had begun production of the Model Y equipped with a 4680 battery, and deliveries were expected to begin in the first quarter of this year.

Panasonic leads the production of 4680 batteries, and the new $25,000 model has no timetable

However, for Tesla's huge demand for power batteries, self-developed production of 4680 batteries obviously can not meet its needs, so Musk hopes to introduce more suppliers to produce this new battery, in addition to Panasonic, LG Energy and Ningde era, EWELL lithium energy, BAK batteries, etc. have also joined the production of 4680 batteries.

Panasonic is currently the fastest developed supplier of 4680 batteries, and the battery giant that is inseparable from Tesla has once again returned to Musk's vision. The collaboration between Panasonic and Tesla began in 2016, when the two sides decided to form a joint venture six years ago, and panasonic's power batteries will be supplied to Tesla's pure electric vehicles. However, the partnership between Tesla and Panasonic has cracked in recent years, after Tesla's Shanghai Gigafactory was completed in October 2019, Panasonic did not continue to be the exclusive supplier of its power batteries, LG Energy and CATL times were shortlisted for Tesla's supply chain, which supplied the Shanghai Gigafactory.

Now, with the production needs of 4680 batteries, Tesla's cooperation with Panasonic is once again close. Hirokazu Umeda, Panasonic's chief financial officer, said at the company's quarterly earnings meeting that Panasonic will start trial production of the 4680 battery at its Wakayama prefecture plant near the company's Osaka headquarters early this year, and once the 4680 battery can be delivered, Panasonic will first prioritize the supply of Tesla. According to Panasonic's production plan, the company expects to invest about 80 billion yen (about $700 million) in Japan to produce 4680 batteries, with an annual output of about 10 GWh.

Both Musk and Tesla have high hopes for the 4680, and one of the big reasons is that the company wants to launch a low-to-mid-range model that costs only $25,000 around 2023. Musk said at last year's shareholder meeting that the company expects to sell 20 million vehicles in 2030, and investors believe that the main growth driver of this sales target will come from new models that cost lower prices. However, due to the impact of the new crown epidemic, the global auto industry supply chain has been severely short, Tesla has cancelled the electric pickup truck Cyberteruck, electric van Semi and the new sports car Roadster delivered this year, and the new $25,000 model has no specific timeline.

Beijing News shell financial reporter Lin Zi Editor Fang Jingyi Proofreader Li Ming