Tesla has released a very detailed update to its 4680 battery cell program, which is expected to be critical to its future electric vehicles. The 4680 battery format has swept the industry since Tesla unveiled its own battery strategy on Battery Day 2020. The automaker claims that the new design has the potential to reduce battery costs by more than 50 percent; since then, it has been working to bring it into mass production, but has hit a few bottlenecks. In a conference call following the release of its first quarter 2023 financial results, Tesla detailed its 4680 battery production.
Drew Baglino, senior vice president of engineering at Tesla, said of the 4680 battery:
At Battery Day, we developed a cost reduction roadmap for five areas of work through 2026. We discussed cell design; anode and cathode materials, structural pack concepts, and the cell plant itself. Since then, we've made progress in all of these areas. For the battery plant, for the Texas 4680 plant, we are completing the construction, commissioning, installation and operation part of the process, and if it climbs fully as we described at Battery Day, the capex per gigawatt-hour will be 70 percent lower than a typical battery plant. We will continue to look for further densification and investment reduction opportunities in future plant expansions such as Nevada.
Tesla produces 4680 cells at its pilot plant in Fremont, but expects to reach higher volumes at its Gigafactory in Texas, which is the " battery factory" Baglino is talking about here.
In terms of battery design, not only are we producing the first generation of benchtop batteries that we launched on battery day, but we are also producing a second, more easily manufactured version today in Texas. On the cathode material side. We are working on several activities in line with our Battery Day roadmap. For lithium, we will break ground on our Corpus Christi lithium refinery in May of this year. We aim to start commissioning parts of the facility by the end of the year. The refinery uses a sulfate-free refining process, which is a low-cost process with no acid or alkaline reagents and low energy consumption. It actually produces a beneficial byproduct that can be reused as a construction material.
The executive also gave a more specific update on its cathode plant at its Texas superplant:
We discussed all of these concepts on battery day. As with the cathode precursor, we have successfully demonstrated the lower process cost, zero wastewater precursor process at the laboratory and pilot scale that we described at Battery Day and are in the process of incorporating this technology into the detailed design phase of our Austin front-end cathode facility. On the cathode production side, we have 50% of the equipment and 75% of the utilities installed at our new cathode building in Austin, and we aim to begin wet and dry commissioning this quarter and next quarter with the goal of producing first material by year-end.
The 4680 cells also support Tesla's new structural battery pack design. The Model Y being produced at the Texas SuperFactory is the first vehicle to feature this radically different chassis/battery pack design, but future Tesla vehicles, including the upcoming Cyber tuck, are expected to feature this design as well. Hopefully, the cost savings will only further depress Tesla's prices. The latest round of price cuts and the certainty of tax credits has more customers considering a purchase.
Baglino has made updates in this area:
Structure packs, we have seen a significant improvement in pack manufacturing using 4680 cells on the structure pack concept, with a 50% reduction in CAPEX and a 66% reduction in plant size, while producing the same amount (gigawatt hours) per year. We do believe that structure as a concept is a great concept. It's simpler. We will continue to load batteries on the structure and use the battery pack as a floor for the vehicle, while iterating the design to get closer to a B-level implementation of this A-level architecture in future programs. The key to shrinking the 4680 team for Q1 is cost and quality.
The executive shared some details about yield improvements in the quarter and focused on reducing future costs in preparation for Cyber truck volume production:
We've made significant improvements in both areas. In terms of Texas production, we're up 50 percent sequentially, 12 percent per unit, 20 percent in peak production and 20 percent per unit. All in all, the team achieved a 25% reduction in COGS during the quarter and we are on track to meet our steady-state cost targets over the next 12 months. For the rest of the year, as we steadily ramp up production ahead of next year's Cyber truck, the top priority is to reduce the cost of the 4680 program.
This is the most detailed update to Tesla's 4680 battery program and could indicate that Tesla is starting to come out of the woodwork.