Tesla turns to Asian partners to address 4680 battery concerns By Reuters

(Reuters) – It’s crunch time at Tesla (NASDAQ:) Inc, where Elon Musk seeks to crack the code to make cheaper, better batteries.

The electric vehicle maker is enlisting Chinese and Korean material suppliers to help drive down the cost and boost the power of its newest battery cells, even as the company struggles with battery-related performance and production issues that have helped delay the release of your futuristic Cybertruck. , according to people familiar with the plans.

Tesla turned to China’s Ningbo Ronbay New Energy and Suzhou Dongshan Precision Manufacturing to help cut material costs as it ramps up production of 4,680 battery cells in the United States, according to the sources, who asked not to be named.

Details of these arrangements have not been previously reported.

If the Austin, Texas-based EV maker is able to iron out performance and process issues and meet its ambitious production goals, the 4680 could ultimately be the lynchpin, rather than a bottleneck, on CEO Musk’s dream of building 20 million vehicles annually by 2030.

Neither Tesla nor Musk could be reached for comment.

As part of its efforts, Tesla also signed a deal with Korea’s L&F Co to supply high-nickel cathodes that could increase the power density of its 4,680 cells, one of the sources said.

The automaker aims to boost its own production with 4,680 cells from Korea’s LG Energy Solution and Japan’s Panasonic (OTC:), an insurance policy to secure future electric vehicle production, two of the sources said. LG and Panasonic are expected to supply cells for the Cybertruck, one of the sources said.

Battery shortages mean “factories are stagnating,” Musk told investors in early March.

The new battery is expected to play a key role in the launch later this year of the cutting-edge stainless steel Cybertruck, the company’s first new model in more than three years.

Tesla had considered three battery options to ensure the launch would not be delayed again: smaller 2170 cells that are widely used in other Tesla models, 4680 cells, and less expensive lithium iron phosphate cells, but the electric vehicle maker he preferred to wait until the 4680 cells are ready. the sources said.

No details about Tesla’s Cybertruck battery strategy, including its use of 4680 cells and consideration of other options, have been reported.

In 2022, Musk said he didn’t expect 4680 batteries to be a “limiting factor for Cybertruck or anything else.”

The Tesla-designed 4680 cell, named for its external dimensions (46mm diameter, 80mm length), is crucial to future production plans. Tesla intends to make versions at factories in Texas, California, Nevada and Berlin for use in vehicles from Model Y to Cybertruck, the sources said.

But Tesla is still struggling to speed up the first wave of production, Musk acknowledged at Tesla’s investor day on March 1.

‘UNDERESTIMATED TESLA IMPACT’

Despite the immediate problems, some analysts remain optimistic that Tesla will solve these problems.

“While execution risk remains and many details remain unknown, Tesla’s impact on the global battery industry may still be underestimated.” Morgan Stanley (NYSE:) said after investor day.

Musk first announced the new cell at Battery Day in September 2020. At that event, he promised a 50% reduction in cell cost through a series of innovations, from a larger cell size to a new “dry” electrode coating process that could dramatically reduce the size and cost of a battery factory while increasing cell performance.

Repeated delays in moving the new cell from the early prototype phase to full-scale production have also delayed the introduction of the highly anticipated Cybertruck, which was designed to take advantage of the cell’s potential improvement in power and energy density, progress yet to materialize.

But it will take time for suppliers to ramp up production.

Panasonic is running a pilot 4680 production line at its Wakayama factory in Japan and plans to start volume production later in the fiscal year ending March 2024.

Shoichiro Watanabe, Panasonic Energy’s chief technology officer, said last month that the company’s new Kansas battery plant will initially focus on 2,170 cells, but will eventually shift production of 4,680 to North America.

Last year, LG said it planned to open a new 4680 production line at its Ochang plant in Korea in the second half of 2023.

Tesla’s first-generation 4680 cells, built at its Fremont, California, factory, failed to meet a power density target, say the people involved.

So far, the automaker has been able to dry-coat the anode, the negative electrode, but it still struggles with dry-coating the cathode, where it is expected to make the most significant gains, the sources said.

Tesla’s attempt to ramp up output from the dry coating process has so far resulted in enough batteries for only about 50,000 vehicles a year, Musk and company executives said.

In 2020, Musk said Tesla would have enough internal capacity of 4,680 to supply 1.3 million Model Ys.

While executives said it seems likely that Tesla could increase production of the 4680 five times by the end of the year, the company is hedging.

Musk is betting that if Tesla ends up with too many batteries this year, it’s a good deal. He can use them for energy storage systems that he sells to utility companies and consumers.

Tesla has also been installing first-generation 4680 cells with “wet” cathodes in so-called structural packages in Model Ys built in Texas. Most of those vehicles use the older 2170 cells.

Tesla plans to use a cathode with more than 90% nickel in the next generation of 4680 cells, two sources said. L&F is expected to be one of the suppliers of that high-nickel cathode, another source said.