Musk made a heavy bet, but analysts said Tesla was unlikely to mass-produce 4680 batteries this year

On March 12, Tesla CEO Elon Musk wanted to achieve mass production of 4680 batteries as soon as possible, so that the company's electric vehicles were cheaper and more powerful. But Musk faces huge challenges in terms of building a new battery factory or expanding the battery manufacturing process.

Musk wants to make cheaper new batteries at a faster rate.

But industry insiders and analysts say Musk is unlikely to achieve Tesla's ambitious goal of mass-producing new batteries this year. Ever since Musk built Tesla into the world's most valuable company, it has always been known for accomplishing all kinds of impossible things. But opening a new factory and developing a new way to make batteries can be too many challenges.

Musk's stakes in making new batteries are high. Prices of battery raw materials such as nickel hit record highs this week. Musk predicted in January that battery supply would be affected next year, making internal mass-produced batteries key to Tesla's business growth.

"He's changing the way batteries are made," said Professor Shirley Meng, a professor at the University of Chicago who has worked with Maxwell, a battery technology company that Tesla acquired. "It's really, very difficult to produce new batteries at this speed and scale," she said. ”

Gene Munster, managing partner at venture capital firm Loup Ventures, said of the next generation of eviction batteries: "I don't think the increase in 4680 batteries next year will be enough to meet demand. Munster believes that Tesla will achieve its goals in the long run, but given the past history of producing new models, the start will be slower.

Musk said mass production of batteries will be very difficult, but it is crucial to the goal of making electric vehicles with lower prices and longer ranges. Only in this way can Tesla maintain its market leadership among more and more competitors.

Like other automakers, Tesla sources batteries from suppliers such as Panasonic, CATL and LG Energy. At the end of 2020, Musk announced that Tesla aims to halve the cost of the most expensive components of electric vehicles by producing its own batteries.

Tesla's 4680 battery, which is 46 mm in diameter and 80 mm long, stores 5 times more energy than the current 2170 battery. Tesla cars can achieve the same energy storage level and range with a smaller number of new batteries, thereby reducing the cost of the vehicle.

Tesla said it will start delivering Model Y electric vehicles with 4680 batteries by the end of March this year. In 2020, Musk said that Tesla will have the ability to produce 100 GWh of 4680 batteries this year, which can be used to build 1.3 million electric vehicles, which is enough to meet the production needs of two gigafactories in Texas and Berlin, Germany.

Tesla expects to deliver about 1.4 million vehicles this year. Benchmark Mineral Intelligence, a research institute for the battery supply chain, expects about 30,000 Model Y cars to carry 4,680 batteries, increasing to 484,000 by 2024.

A double challenge

Tesla faces a lengthy process in expanding its battery factory, which is further complicated by a new manufacturing technique called dry electrode coating.

Caspar Rawles, Chief Data Officer at Benchmark Mineral Intelligence, said: "There was a fairly lengthy process of fine-tuning of the equipment before mass production could begin. He added that Tesla must improve its manufacturing process this year to ensure that the 4680 battery is mass-produced in 2023.

"Battery production is difficult, even for experienced suppliers," Rawls said.

Tesla said it produced its 1 millionth 4680 battery in January, but did not say how long it took to achieve that goal. But Rawls estimates that 1 million batteries can only meet the production of 1,200 Model Y electric cars, suggesting that Tesla still has a long way to go.

Tesla did not respond to emails about its battery business. Drew Baglino, Tesla's senior vice president, said in January that Tesla's test battery plant in Fremont, Calif., "has made meaningful progress on the trajectory," while the upcoming battery plant in Texas is installing battery equipment.

Bagrino said Tesla's "focus is on improving production, quality and cost-effectiveness to ensure we're ready for a larger scale of production this year and next." ”

As an iconic target for Tesla, the company expects to beat traditional battery makers Panasonic and LG with mass production of 4680 batteries.

Tesla's biggest difficulty is that it is planning to adopt a dry electrode manufacturing process, a technology it acquired when it acquired California startup Maxwell in 2019. Musk admitted that the factory-related equipment is still "non-existent" and "under manufacture."

The dry electrode manufacturing process bypasses the complex traditional lithium battery manufacturing steps, which require chemical solutions and are cumbersome. If dry electrode technology can be successfully mass-produced, the manufactured battery will be cheaper and more efficient, but Musk frankly admits that this is a challenge.

He said at the European Battery Conference in November 2020: "The very difficult part is how to scale up production and achieve extremely high reliability and safety with batteries. ”

Even so, Musk's plan is still considered too optimistic by the industry. Battery manufacturers have spent more than a decade optimizing the traditional manufacturing process for lithium-ion batteries.

A few years ago, Musk said that mass production of Model 3 electric cars was Tesla's "production hell." Professor Meng Ying said that musk may experience a "death valley" in expanding the dry electrode manufacturing process. But she added that Tesla will overcome those difficulties.