[Bojo, Battery] Musk's Confidence in 4680... "Producing Cheaper Than Anywhere Else Within the Year"

Tesla AGM: Musk Confident in Battery Internalization
"Cathode Material and Lithium Plants Under Construction... Accelerating Vertical Integration"
Some Raise Battery Yield Concerns... "Outsourcing Possible by Year-End"

4680 cylindrical batteries produced at Tesla's Gigafactory. Photo by Tesla Official YouTube Capture

Elon Musk, CEO of Tesla, expressed confidence in the mass production and price competitiveness of the 4680 (46mm diameter · 80mm height) battery. He also revealed that Tesla is investing in and constructing cathode material and lithium refining plants, which account for a large portion of production costs, demonstrating the company's commitment to battery internalization.

Musk: "We will produce batteries cheaper than anyone else by the end of the year"

According to Tesla's official YouTube on the 26th, Elon Musk recently stated at the annual shareholders' meeting held at the company's headquarters in Austin, Texas, "Battery cell prices have been fluctuating sharply, similar to the DRAM market," but added, "We expect to achieve 'price parity' by the end of this year, producing batteries at a much lower cost than any other supplier." Musk's remarks were in response to a shareholder's question during the meeting: "It has been four years since the introduction of the 4680 battery. What are Tesla's plans to make batteries cheaper?"

Elon Musk introduced the 4680 battery, called a 'game changer,' at Tesla's Battery Day in September 2020. This cylindrical battery, with a diameter of 46mm and length of 80mm, features five times the capacity and six times the output compared to the existing 2170 (21mm diameter · 70mm length) battery, and increases driving range by 16%. Although the main agenda of the shareholders' meeting was the reapproval of stock options worth 66 trillion won based on Musk's management performance, Musk also delivered a strong message about battery internalization.

In his presentation, Musk said, "Behind Tesla's Giga Texas factory, we have built a cathode material plant, and in southern Texas, we also have a lithium refining plant," adding, "We have all the pieces of the puzzle. The Cybertruck uses Tesla's self-produced 4680 battery cells exclusively." Tesla began construction of a lithium refining plant covering 4.86 square kilometers with an investment of $375 million (approximately 504.4 billion won) in May last year. This plant is expected to start producing lithium hydroxide from 2025. Tesla's direct construction of cathode material and lithium processing plants, which account for the largest share of battery production costs, reveals Tesla's commitment to battery internalization and vertical integration. Musk expressed confidence in the price competitiveness of the 4680 battery. He stated, "(In battery production) we are moving vertically," and added, "(This investment) is a wise investment that can yield greater results than people think."

Automakers have been keen on internalizing batteries, which account for 30-40% of the cost of electric vehicles. Although voices for internalization have diminished recently due to the electric vehicle chasm (temporary stagnation in a growth industry), just one or two years ago, some global automakers did not deny the possibility of in-house production. This also served as leverage in battery supply. If Tesla's battery cost reduction and mass production become a reality, it will impact other automakers as well.

Questions remain about 4680 battery yield despite Musk's assurances

Despite Musk's assurances, doubts still linger regarding Tesla's battery internalization.

Automotive media outlet AutoEvolution recently reported that Tesla might halt production of 4680 battery cells at the Texas Gigafactory and fully outsource to external suppliers. They pointed out that Tesla's self-produced 4680 batteries do not show significant performance improvements over the previously used 2170 batteries and lack competitiveness in charging speed and production cost. AutoEvolution noted, "Tesla has recently conducted large-scale layoffs to cut costs, and if it fails to achieve the desired results by the end of this year, it may stop 4680 production and fully outsource supply." Some industry insiders estimate Tesla's 4680 battery yield (good product ratio) to be only 20-40%.

Anode material factory under construction near Tesla's Texas Gigafactory. Photo by Tesla Official YouTube Capture

Tesla attempted to increase the production speed of 4680 batteries using 'dry coating' technology, but it reportedly has not been successful. The plan was to produce enough 4680 battery cells to equip approximately 24,000 Cybertrucks annually, but actual production appears to fall short of the target. A battery industry official said, "The dry process omits drying and calendaring (rolling and pressing) steps compared to the conventional wet process, saving production time and processing costs, but it is technically challenging," adding, "It was predicted to take considerable time to establish a process suitable for mass production, and Tesla has yet to find a solution."