The secret behind Elon Musk’s goal of selling 20 million Tesla’s a year by 2030 lies in its pioneering battery technology.
The good news is that by using bigger cells and a new process to dry-coat electrodes, Tesla could halve the cost of a Model Y battery, saving more than 8% of the car’s U.S. starting price, battery experts with ties to the company said.
The bad news is that it’s only halfway there, according to 12 experts close to Tesla or familiar with its new technology. That’s because the dry-coating technique used to produce the bigger cells in Tesla’s 4680 battery is so new and unproven that the company is having trouble scaling up manufacturing to the point where the big cost savings kick in, the experts told Reuters.
They just aren’t ready for mass production,” said one of the experts close to Tesla. Still, the gains Tesla has already made in cutting battery production costs in the past two years could help boost profits and extend its lead over most electric vehicle (EV) rivals.
Musk’s promised improvements in battery cost and performance are seen by investors as critical to Tesla’s quest to usher in an era where it can sell a $25,000 EV for a profit – and stand a better chance of hitting its 2030 targets. Battery systems are the most expensive single element in most EVs, so making lower-cost, high-performance packs is key to producing affordable electric cars that can go toe to toe with combustion-engine rivals on sticker prices.
Tesla is one of only a handful of major automakers that produce their EV batteries and by manufacturing Model Y cells at U.S. plants, the SUV will remain eligible for U.S. tax credits when many rival EVs may no longer qualify.
Among the 12 battery experts Reuters spoke with, nine have close ties to Tesla and three of the nine have examined Tesla’s new and old battery technology inside and out through teardowns. Tesla did not respond to requests for comment.
The 4680 battery pack only needs 830 cells and Tesla has changed the design so that there are only two weld points per cell, slashing the welding to 1,660 points and leading to significant cost savings.
The simpler design also means there are fewer connectors and other components, which has allowed Tesla to save further on labor costs and machine time. Another source of efficiency has been the larger cell’s far sturdier outer case. Tesla can now bond the cells together with adhesive into a rigid honeycomb-like pack which is then connected directly to the inner body structure of the Model Y.
This eliminates the intermediate step of bundling cells into larger modules which are then installed in a traditional battery pack, the sources said.
By shifting to this “cell to vehicle” design, Tesla can reduce the weight of a traditional 1,200-pound battery pack by 55 pounds or more – saving about $500 to $600 per pack, one of the sources said.
But mastering the dry-coating technique remains the holy grail. Bulking up the battery cell helped a lot in boosting efficiency, but pushing for 50% cost savings for the cell as a whole is another matter, one source said. That will depend on whether Tesla can deploy the dry-coating process successfully in a factory.
