[battery complete conquest](20) K-Battery New Hope, 46xx Cylindrical Cells Are Coming

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Choi Jae-won, Senior Vice Chairman of SK Group, officially announced SK On's entry into the cylindrical battery market during CES 2024, the world's largest electronics and IT exhibition held in Las Vegas, USA, on the 10th (local time). He stated, "Development of cylindrical batteries has progressed quite a lot." SK On, which had focused on pouch-type batteries, has now decided to diversify its product lineup to include prismatic and cylindrical types.

SK On's entry into the cylindrical battery market has attracted attention due to the possibility of supplying Tesla, especially regarding the development of the 4680 cylindrical battery.

The 4680 battery, which improves energy density and lowers cost compared to the existing 2170 battery, is gaining attention as the next-generation cylindrical battery. Tesla first mentioned the 4680 battery at Battery Day in September 2020. This battery has been applied to some Model Y vehicles and the recently launched pickup truck, the Cybertruck. However, it has faced difficulties in mass production due to yield issues.

Following Tesla, BMW also plans to apply cylindrical batteries with a diameter of 46 mm to its electric vehicles launching in 2025. If Tesla and BMW's attempts succeed, other electric vehicles are expected to adopt the 46 mm cylindrical battery size one after another. Accordingly, major battery cell companies are accelerating internal development of 46 mm batteries.

Since the second half of last year, the global electric vehicle market has shown signs of slowing growth. Analysts interpret this as a kind of chasm (temporary demand stagnation) that occurs after electric vehicle adoption reaches a certain trajectory. Attention is focused on whether the newly emerging 46 mm battery can provide a turning point for the electric vehicle market.

'Battery Standard War', Who Will Be the Final Winner?

Lithium-ion batteries are broadly divided into cylindrical, prismatic, and pouch types based on their shape. Each differs not only in shape but also in characteristics. The difference in form leads to different applications.

The cylindrical battery is shaped like a round cylinder, similar to the commonly encountered AA size battery. The manufacturing process involves stacking the cathode, separator, and anode, then rolling them in a winding machine to form a round cylinder shape. This rolled form is called a jelly roll. The completed jelly roll is placed in an aluminum can, electrolyte is injected, and then sealed.

Since cylindrical batteries have the longest history, their standards are well established. They can be mass-produced, which reduces production costs. Lithium-ion batteries were first commercialized in cylindrical form.

Cylindrical batteries developed by Panasonic. From left to right, sizes 1865, 2170, and 4680.

Tesla's first electric vehicle, the Roadster, launched in 2008, used Panasonic's 1865 size cylindrical batteries. These were widely used because they were easy to obtain, had a certain level of safety verification, and were inexpensive to manufacture. However, when cylindrical batteries are bundled together, structural gaps create empty spaces, resulting in lower energy density.

Prismatic batteries have a rectangular shape with an aluminum exterior. In the past, like cylindrical batteries, the jelly roll was made by winding and then placed in a rectangular can. This method had the disadvantage of dead space inside the can. Recently, stacking methods, where layers are stacked neatly instead of winding, have been introduced.

Prismatic batteries were widely used in small electronic devices and smartphones in the 1990s. Their position seemed to be shaken with the emergence of pouch batteries but they have regained popularity with the advent of electric vehicles.

Prismatic batteries are stacked with rigid aluminum, providing good durability and making them advantageous for layered installation in electric vehicles. China's CATL has utilized these advantages to simplify packaging processes with a Cell to Pack method, significantly reducing costs.

CATL's Cell-to-Pack (CTP) Battery System

Prismatic batteries use thick outer materials to protect the cells, making them heavier than pouch types. They also have narrow gaps between batteries, making thermal management difficult.

Pouch batteries are made by stacking cathode, separator, and anode materials inside a pouch-shaped film case, sealing it, and injecting electrolyte. Because pouch batteries can be made thin, they have been widely used in thin electronic devices such as smartphones.

Pouch batteries also have high space efficiency, allowing for higher energy density, which is why they are widely adopted in electric vehicles. They can be customized into various shapes, offering flexibility. However, they have lower physical strength compared to other types and involve complex manufacturing processes, resulting in higher production costs.

In the early days of electric vehicles, each company had preferred form factors. Battery cell companies' main products varied according to customer demands. Panasonic, a major supplier for Tesla, mainly produced cylindrical batteries.

In Korea, LG Energy Solution and SK On supplied pouch batteries to GM and Ford, respectively. Domestic automakers Hyundai Motor and Kia also primarily used domestic pouch batteries. Samsung SDI supplied prismatic batteries to European electric vehicles such as BMW and Volkswagen.

Chinese companies like CATL and BYD mainly produced prismatic batteries. Prismatic batteries hold the largest share in the global electric vehicle market, largely influenced by Chinese electric vehicles. According to SNE Research, as of Q1 2023, prismatic batteries accounted for 65%, pouch batteries 20%, and cylindrical batteries 14% of the market.

However, the compartmentalized distinctions by manufacturer are gradually disappearing. As electric vehicle types diversify, manufacturers demand various battery forms suited to the vehicle's purpose, characteristics, and design. Accordingly, battery companies no longer insist on one or two form factors but develop and produce various types. Recently, the share of prismatic batteries is decreasing while pouch and cylindrical batteries are increasing.

Automakers are also diversifying battery suppliers to reduce dependence on specific companies and spread risks. A representative case is GM, which had a long-standing partnership with LG Energy Solution, announcing in April 2023 the establishment of a joint venture with Samsung SDI to produce prismatic and cylindrical batteries in North America. Hyundai Motor and Kia also do not insist on using only domestic batteries. Battery companies now face an era of fierce competition where survival depends on producing various types of products demanded by customers.

'New Order' 46 mm Cylindrical, Why the Delay?

Particularly noteworthy is the increase in adoption of cylindrical batteries. Once considered exclusive to Tesla, cylindrical batteries have attracted interest from other automakers such as BMW, Volvo, and Stellantis following the announcement of the 4680 battery.

As adoption of the 4680 battery is expected to increase, major battery companies are rushing to develop it. Besides Tesla's long-time partner Panasonic in Japan, LG Energy Solution and Samsung SDI in Korea are developing it. In China, about five to six companies including CATL, EVE Energy, and BYD are also developing it.

The 4680 battery refers to a battery with a diameter of 46 mm and height of 80 mm. The first-generation cylindrical battery was the 1865, with a diameter of 18 mm and height of 65 mm. The second generation was the 2170, with a diameter of 21 mm and height of 70 mm. These batteries are sometimes called 18650, 21700, etc., with an extra zero added; the '0' indicates cylindrical shape.

The 4680 battery gained attention when Tesla first mentioned it at Battery Day in September 2020. At that time, Tesla stated that this battery would have five times the energy of the existing 2170, increase driving range by 16%, and improve power sixfold. Tesla also increased energy capacity by applying high-nickel cathode materials and increasing silicon content in the anode.

Increasing the size from 2170 to 4680 increases volume about fivefold. The 4680 cylindrical battery is not just larger in size. Tesla applied a different cell design from conventional secondary batteries and aimed to reduce costs by up to 56% through innovations in processes and packaging methods. Since then, how Tesla would realize this has been a hot topic.

In terms of design, the 4680 battery adopts a tabless method by eliminating the tab. Conventional cylindrical batteries have a 'lead tab' that serves as the current path from the electrode to the terminal, but this was removed. Removing the tab and using the entire electrode surface as a conductor improves electron flow and evenly disperses heat.

However, implementing this is quite a challenging technology. The battery industry is struggling to establish mass production systems using tabless technology.

Tabless structure of 4680 battery

The 4680 battery applies a dry coating method instead of wet coating in the electrode process. The electrode process involves applying cathode and anode materials onto a substrate. Traditionally, active materials, conductive agents, and binders were mixed with solvents to form a slurry, which was then coated onto the current collector. This process requires drying the electrode before proceeding to the next step.

In contrast, dry coating applies electrode materials directly onto the current collector without making a slurry with solvents. This eliminates the drying step, saving significant time and cost. However, applying materials without slurry is quite difficult.

Currently, one of the main reasons for delays in 4680 battery production is believed to be the electrode process.

Tesla began deliveries of the next-generation pickup electric vehicle, the Cybertruck, on November 30 last year. The waiting list for this vehicle reaches 2 million people. However, production speed is extremely slow. Elon Musk has stated that by 2025, Tesla aims to produce 250,000 Cybertrucks annually. At this pace, customers would have to wait four years to receive their vehicles.

Even achieving this goal is uncertain. According to a Reuters report in December last year, Tesla's Gigafactory Texas produces only enough 4680 batteries to supply 24,000 Cybertrucks annually. Tesla reportedly has no major issues applying dry coating to the anode but faces difficulties in the dry coating process for the cathode. The technology introduced to reduce production costs is ironically causing lower yields.

46 mm Cylindrical Battery: The Korea-China-Japan Three Kingdoms

Currently, Tesla is the only company commercially producing 4680 cylindrical batteries. Tesla operates a 4680 pilot line in San Francisco, with mass production at Gigafactory Texas. Other companies developing 4680 batteries include Japan's Panasonic and Korea's LG Energy Solution. Considering the popularity of the Cybertruck and the shortage of 4680 battery supply, these companies are expected to have new opportunities for market expansion.

Panasonic initially planned to start mass production of 4680 batteries for Tesla in fiscal year 2023 (April 2023?March 2024) but postponed it to the first half of fiscal year 2024 (April?September 2024). If this plan proceeds, Panasonic is expected to officially launch 4680 batteries in the second half of this year at the latest.

LG Energy Solution announced in June 2022 that it would invest 581.8 billion KRW to expand a 4680 battery production line with a capacity of 9 GWh at its Ochang Plant 2 in Korea. Industry insiders expect LG Energy Solution to begin mass production of 4680 batteries in the second half of 2024.

LG Energy Solution employees are showing the 2170 battery produced at the Ochang plant. Photo by LG Energy Solution

LG Energy Solution also plans to produce 4680 batteries at its North American Arizona plant, aiming to make it a key production hub for 4680 batteries in North America. The strategy is to complete technology development at the 'mother factory' in Ochang and then establish mass production systems in Arizona. Production capacity is planned to increase from 27 GWh to 36 GWh. The target for mass production in North America is the end of 2025.

LG Energy Solution, which mainly produced pouch batteries, is expanding its lineup to include cylindrical batteries. Currently, Ochang Plant 1 produces 2170 cylindrical batteries.

Another market that battery companies are eyeing is BMW. At an event in September 2022, BMW unveiled a cylindrical battery with a diameter of 46 mm and announced it would be applied to the 'Neue Klasse' launching in 2025.

The battery BMW will adopt has the same diameter of 46 mm as Tesla's but different heights. BMW revealed two versions: 4695 with a height of 95 mm and 46125 with a height of 125 mm. BMW aims to improve energy density by 20%, driving range by 30%, and reduce cost by half compared to existing batteries. The cathode will have reduced cobalt content and increased nickel, while the anode will use silicon.

Cylindrical battery with a diameter of 46mm unveiled by BMW. Photo by BMW

BMW announced that China's CATL and EVE Energy will supply new cylindrical batteries. To produce 46 mm batteries, BMW plans to establish two factories each in China, Europe, and North America, each with an annual capacity of 20 GWh.

CATL and EVE Energy announced agreements to build new cylindrical battery plants with BMW in September 2022 and May 2023, respectively. In October last year, Chinese media reported that SVOLT also signed a supply contract with BMW for cylindrical batteries, but BMW has not officially confirmed this.

4695 Cylindrical Battery Under Development by Chinese Company EVE Energy

Although not officially confirmed by BMW, Samsung SDI is reportedly developing 46 mm cylindrical batteries to supply BMW. Samsung SDI established a pilot line for 46 mm cylindrical batteries in early 2023 and is developing various sizes including 4680, 4695, and 46125.

In addition, Chinese companies such as CALB, BAK, and Guoxuan are also developing cylindrical batteries with a diameter of 46 mm. It is not yet known which customers these companies will supply.

Hi Investment & Securities, 4680 is Coming, 2022.6.14
BMWblog, BMW Confirms Round Battery Cells For Neue Klasse With 30% More Range, 2022.9.9
BMWblog, All you need to know about BMW’s Gen6 cylindrical cells, 2022.9.19
China Daily, CATL to supply BMW cylindrical batteries from 2025, 2022.9.13
SNE Research, Possibility of 4680 Battery Commercialization?, 2023.3.30
Energy Storage News, EVE to build plant to supply BMW electric vehicles in Hungary, 2023.5.16
Batteries News, Great Wall-backed Svolt Energy gets order to supply batteries worth over $10 billion to BMW, report says, 2023.10.13
Meritz Securities, Expectations for LG Energy Solution’s 4680 Battery Mass Production in 2024, 2023.11.3
Reuters, Tesla Cybertruck deliveries hostage to battery production hell, 2023.12.22