Tesla initially announced the new battery cell format at their Battery Day earlier last year. The benefits of the new cells designated 4860 are that they are bigger and claimed to be better, not the least because of advances in production. While Tesla is also launching its own in-house production, they will have to rely on suppliers as well to deal with the planned battery and vehicle mass production.
Earlier, he didn’t made it clear that those other suppliers would be making the 4680 cells since the new tabless design and several components in the cell required Tesla to design new manufacturing processes. Though it does make sense considering all the benefits of the new form factor, but we also know that it will take some time for Tesla to switch all its vehicle programs to the new format. If several battery suppliers start producing these cells for Tesla, we will see a real shift in the industry to this new format.
On top of those in-house production plans, Tesla is partnering with current battery suppliers to deploy their own production of the new 4680 cell. The automaker had to develop new manufacturing processes to make the battery cell and deploy those at scale in its own new battery factories being built near Berlin, Shanghai, and Austin.
At this point, it seems the issue isn't as much that the 4680 cells can't be produced, but rather, they're not yet available in large enough volume to begin putting into vehicles. Moreover, the testing process is likely extensive, and it wouldn't be wise for Tesla to start delivering cars with 4680 cells before the battery tech is proven safe.
As Tesla is already scaling up its production processes and doing the necessary modifications within its battery factories that may come on board in Germany, China, and the United States. But plans are already in progress as well Tesla to incorporate the 4680 design and technology in partnership with battery manufacturers for the production of improved batteries for its cars. In fact, four of the leading battery manufacturers, including LG Energy Solutions and Samsung SDI, had individually announced plans to build their own versions of the Tesla 4680 battery cell.
These companies have set up a prototype production line at existing facilities. The cost of the project is expected to run into the tens of millions of dollars.
While LG has plans of bringing these cells to mass production by 2023, the timeline isn't clear from Samsung. It is further reported that LG and Samsung are now carrying forward tests on these cells for studying the structural integrity. There are also other players vying for attention. These include CATL and Panasonic.
According to industry sources on Monday, Samsung SDI has been supplying its ESS batteries to Tesla since the fourth quarter of last year. The contract size or value was not disclosed but it is estimated to be a major deal for the Korean ESS leader, industry insiders say. Thanks to its brisk sales of both ESS and EV batteries last year, Samsung SDI is estimated to have earned a record 320 billion won in operating profit in the quarter ended December, soaring from 20.1 billion won a year earlier. Quarterly operating profit would top 300 billion won for the first time in history, analysts expect.
It also results in a 14% reduction in cost per kilowatt hour, again, at the cell form factor level only. But the cell is only a small part of the story. The new cells are not the result of a single change to the size of the cells. Much like the numerous rewrites of Tesla Autopilot over the years, the 4680 cells represent a fundamental rewrite of the history of battery cells at Tesla.
All told, Tesla’s redesign of the battery, cathode, and vehicle frame translate to an expected improvement of 56% in Tesla’s cost per kilowatt hour. That’s a game changer for Tesla and will enable a completely new generation of low cost electric vehicles. It all starts with the humble battery cell. Tesla has made significant progress in rethinking the battery cell and is well along the way to rolling these new cells into production.
