Will 4680 end the high prosperity of lithium iron phosphate?

This article is based on publicly available materials and is for informational purposes only and does not constitute any investment advice.

Since Tesla demonstrated the 4680 large cylinder battery on the battery day on September 23, 2020, and said that it will be installed on the main model after it, this new large cylinder battery with the advantages of increasing battery power (6 times that of 2170 batteries), reducing battery cost (14% of battery costs), optimizing heat dissipation performance, production efficiency, charging speed, energy density, cycle performance and other aspects has continued to receive widespread attention from the market.

Previously, due to the problem of battery yield (for power batteries, 90% yield is the acceptable lowest point), the mass production progress of 4680 large cylindrical batteries has been affected, but Tesla officials said last weekend that its pilot factory in California produced 1 million 4680 large cylindrical batteries in January.

Does this mean that full mass production of the 4680 large cylindrical battery is about to start? At the same time, the arrival of the 4680 large cylindrical battery, which is the main push to promote nickel-lithium batteries, represents the cooling of the high prosperity of lithium iron phosphate batteries?

01

Mass production of the 4680 does not represent the end of lithium iron phosphate batteries

The mass production of 4680 large cylindrical batteries is actually not surprising, as the type of power battery promoted by Tesla, not only Tesla's own power battery manufacturers are conducting research and capacity construction, almost all the world's top power battery manufacturers such as Ningde Times, Panasonic, LG New Energy, Yiwei Lithium Energy, etc. are preparing for the arrival of 4680 large cylindrical batteries, but the mass production of 4680 large cylindrical batteries does not represent the end of lithium iron phosphate batteries.

First of all, Tesla has said many times in 2021 that lithium iron phosphate batteries will be an important supporting battery for Tesla's models, and from the specific action, Tesla whether it is a large order for the supply of lithium-ion power battery products signed for up to 4 years with the leading power battery company Ningde Era, or the blade battery supply contract signed by BYD, a battery manufacturer that ranks among the best in the field of lithium iron phosphate batteries, Tesla needs lithium iron phosphate batteries.

In general, Tesla will carry out dual-track operation - 4680 large cylindrical batteries and lithium iron phosphate batteries, Tesla will use different batteries for different models and different versions of similar models, there is no conflict between the 4680 large cylindrical batteries and lithium iron phosphate batteries, and there will be no impact on Tesla's battery suppliers of lithium iron phosphate batteries at present.

Secondly, Tesla in 2021 with a sales of up to 936,000 vehicles, for 4 consecutive years to become the world's best-selling new energy vehicle companies champion, its Tesla Model 3 and Tesla Model Y also became a member of the global sales TOP3, in 2022, due to the product shortage tesla said that it will not launch new models but choose to expand production capacity, which means that in 2022 to break through the million sales mark is just the beginning, the annual sales of 1.5 million is not impossible.

However, Tesla wants to expand its production capacity as the goal to meet sales expectations, and the mass production efficiency of the current 4680 large cylindrical batteries is obviously impossible to achieve, in other words, lithium iron phosphate batteries will still act as the main force.

Finally, the 4680 large cylindrical battery itself is actually only a number representing a battery size, not a unique technology of ternary lithium batteries, purely from the material itself there is no breakthrough change, just like BYD's blade battery, so to some extent, the use of lithium iron phosphate cathode material as the cathode material of the 4680 large cylindrical battery is not impossible, just to achieve the high energy density preset by the 4680 large cylindrical battery, so it is expected to use ternary cathode material.

Therefore, we believe that the 4680 large cylindrical battery does not squeeze the share of lithium iron phosphate batteries.

02

4680 large cylindrical battery full mass production is about to start?

The mass production progress of the 4680 large cylindrical battery has always been in line with expectations, from the 72% yield that was difficult to look at directly at the beginning, to the 80% later under the unremitting research and development and planning of battery manufacturers such as Panasonic, and then to about 90% of the yield that almost meets the mass production requirements, which shows that Tesla and major battery manufacturers attach importance to the 4680 large cylindrical battery.

However, from the perspective of the mass production of the 4680 large cylindrical battery officially announced by Tesla this time, it is still unrealistic to fully mass-produce and fully install Tesla's various main models, and it will take a while.

According to Tesla's official information, the pilot factory in California produced 1 million 4680 large cylindrical batteries in January, and 10 million 4680 large cylindrical battery cells per month were only a drop in the bucket compared to Tesla's production and sales rate, which is still a case where 4680 large cylindrical batteries reduced the number of battery cells in a single battery pack.

Because the 4680 large cylindrical battery itself has become larger, the capacity of the internal active material has also become larger, so it has brought about the reduction of the cells of a single battery pack, the previous generation of 1860 cylindrical batteries need 7200 + cells, the second generation of 2170 cylindrical batteries have improved, only 4400 + cells are needed, to the current three generations of 4680 large cylindrical batteries are even more orders of magnitude reduction, only 950 cells are needed.

But even so, 1 million 4680 large cylindrical battery cells only meet the needs of 1050 Tesla cars, compared with Tesla's hundreds of thousands of production and sales per month, it is indeed difficult to achieve comprehensive coverage in a short period of time.

In terms of Tesla's current 4680 large cylindrical battery barely meeting the minimum standard of 90% yield of mass production and the production level of 1 million 4680 large cylindrical battery cells per month, as well as Tesla's goal of fully expanding production capacity in 2022, Tesla may only achieve trial installation of some models and a small number of models in a short period of time, Tesla or will gradually match according to its different models and versions.

Lithium iron phosphate batteries will continue to be the main direction of choice for the standard version of Tesla's models, while other long-haul versions and high-performance versions of the model may use ternary lithium batteries and gradually convert from 2170 cylindrical batteries to 4680 large cylindrical batteries.

In addition to Tesla's own words, the first model to use the 4680 large cylindrical battery will be the Tesla Model Y at the Texas factory, which is a high-end model with relatively low production and sales, Model X and Cyberruck in research and development, as well as large models such as Semi, which has higher energy density requirements. (Author: Wu You; Source: See Wisdom Research Pro)