Tesla Is Trying To Fix Its Biggest Mistake
Tesla Is Trying To Fix Its Biggest Mistake
Could this put Tesla back on a winning streak?
On the 22nd of September 2020, Musk unveiled Tesla’s ultimate trump card, the 4680 battery. This battery would use a new form factor, new assembly methods like dry-coating, and revolutionary materials like silicone anodes and cobalt-free cathodes to reduce production costs by 56%, increase EV ranges by 54% and reduce the amount of investment required in battery production lines by 69%. This would take Tesla to new heights, enabling cheaper models, more capable models, increased profit margins, and further domination of the EV sector as the competition scrambles to keep up. Now, three and a half years later, the 4680 barely has any of the promised features, it has failed to hit any of its targets, Tesla’s cars no longer stand out from the competition, and Tesla’s sales figures and profit margin are falling off a cliff. Needless to say, the failed promise of the 4680 is one of Tesla’s most significant weaknesses. It seems Musk realises this, as he recently fired Drew Baglino (or at least persuaded him to resign), who had been with Tesla since 2006 and had been head of Tesla’s battery development since the inception of the 4680 and has appointed a new head of battery development to get the 4680 sorted before it’s too late. But was firing Baglino the right move? And is it already too late?
Let’s quickly quantify what I mean by the 4680 being a failure. After all, it arguably isn’t.
The Model Y and Cybertruck both use 4680 packs. These packs are currently 20% cheaper to produce than the previous generation Panasonic cell-based battery packs Tesla was using, but that is only because of the form factor of the 4680. The larger cell size and simple glue-it-together construction method, paired with using the pack as a structural element of the car’s chassis, has made production simpler with fewer steps and less material needed, leading to a lower cost. As such, 4680 packs currently cost around $105 per kWh. But that is where the good news ends.
These cells don’t use silicone anodes, they still use standard cobalt-rich cathodes, they are less energy dense than the previous generation cells, EVs don’t have any increase in range from using them, they charge slower than previous generation cells, and the investment needed in their production is far larger than any other form of battery out there. Moreover, the dry-coating cell assembly method, which was crucial in reaching its target price point, is a severe bottleneck; as such, Tesla can only currently produce enough 4680 cells per year for 24,000 Cybertrucks.
Here is the thing: even with those fancy anode and cathode materials, the 4680 would have no charging, safety or longevity advantage over its competitors. The only way it can compete is through affordability. But LFP cells (an alternative battery chemistry to lithium-ion) from companies like BYD and CATL charge at the same speed as the 4680, last twice as long, and are significantly safer while costing as little as $80 per kWh! As such, many of Tesla’s competitors now have cars with better specs for less than the equivalent Tesla while having larger profit margins. If Tesla wants to compete like-for-like with these cells, it needs to get to the 4680 to reach its initial promised price point. The only way they can do this is through dry-coating, which is where the problem lies. Let me explain.
Rather than reducing the cost of the cells through different battery chemistries that use cheaper materials, such as LFP or sodium-ion, Tesla opted to use dry-coating. Usually, batteries use a wet-coating process, which involves coating the electrodes in a wet chemical slurry and then meticulously drying them. This coats the electrodes in the graphite and binding agents necessary for them to work with the rest of the battery correctly. The drying stage is extremely expensive as it requires an enormous amount of time, space and energy. However, Tesla’s dry-coating (which they didn’t invent but bought out a company that developed it) enables them to skip this costly stage altogether. Instead, the graphite and binding agents are applied as a fine powder, which is then adhered to the electrode through pressure and temperature changes.
In theory, Tesla’s dry-coating is brilliant. But, unlike alternative battery chemistries, it is an unproven technology, and Tesla has discovered it is a nightmare to make it work at scale. Reports have shown that 30–50% of the dry-coated 4680 cells that come off the production line are scrapped due to critical quality issues. For some comparison, only 5% of cells are scraped on a typical profitable battery production line.
Needless to say, such scrappage rates skyrocket the price per kWh. So, why is that happening?
Well, when Tesla sets up small production lines, the scrappage rate is far better. The issue is that the larger machines that use rollers to coat several electrodes in one go struggle to apply pressure and heat evenly enough, leading to warped, unusable electrodes. Moreover, these larger machines reportedly have serious problems managing the amount of heat they produce, which can also ruin the electrodes. As such, Tesla is struggling to make enough 4680 cells without the cost of each cell blowing up.
So, with these massive limitations of the 4680 production line and Baglino leaving, who was critical in the small progress made with the 4680 production lines, how will Tesla solve this problem? Well, Musk recently appointed a new head of battery development, Bonne Eggleston, and reportedly told him to get the 4680 sorted ASAP. In fact, Eggleston told the team at Tesla that they must lower the production costs of the 4680 cells below those of Panasonic and LG by 2025. Something they can only do by nailing the dry-coating process.
However, details on exactly how Eggleston will do this are scant. He has been with the 4680 project since its inception, and a new leader with experience in the project can always breathe new life into it. But I’m failing to see how Eggleston will do a better job than Baglino. Especially as Baglino had years of experience with batteries and manufacturing processes, while Eggleston’s previous experience is only in solar power R&D. This is yet more evidence that Musk is hiring project leaders based on how much they shower him with praise, and agree with him, rather than on experience or merit. If Eggleston is as much of a yes-man as he seems on paper, he could be incredibly damaging to such a difficult a project as the 4680. Even if he isn’t, the project seems doomed. Multiple startups with massive amounts of experience in chemistry and manufacturing are also having a horrific time getting dry-coating to work for large-scale battery production.
So, it is entirely possible that this extra pressure from Musk and appointing a new head of battery development might not make any difference to the 4680 or Tesla, and the project will fall even further behind its rivals. But even if they do nail dry-coating, it may already be too late. CATL recently announced their Shenxing Plus, the world’s first LFP cells with a driving range of 1,000 km (620 miles) and ultra-fast charging of 600 km (372 miles) of added range in just 10 minutes. What’s more, CATL recently announced that they would cut the cost of LFP cells by 50% by the middle of 2024. As such, the Shenxing Plus is set to cost from $60 — $75 per kWh, making it the same price as the 4680 was meant to be, but with better safety, better lifespan, and much faster charging speeds. With batteries like this just over the horizon, you have to ask why Tesla is even bothering to fix the 4680? It’s already too late.
Thanks for reading! Content like this doesn’t happen without your support. So, if you want to see more like this, don’t forget to Subscribe and follow me on BlueSky or X and help get the word out by hitting the share button below.
Sources: Notebook Check, Will Lockett, EHVTI, Reuters, SEAISI, Electrek, Planet Earth & Beyond, Forbes