4680 battery, works again?

The 4680 battery is of great significance to Tesla.

Therefore, although Tesla’s stock price plummeted as soon as its Q2 2024 financial report came out, the delivery details of the 4680 batteries still shine.

In the financial report, Tesla stated that the delivery volume of 4680 batteries in Q2 increased by more than 50% month-on-month. In addition, Tesla has successfully manufactured the first Cybertruck equipped with mass-produced equipment using dry electrode technology. Tesla said this is a huge technological milestone.

In response to investors' questions about the progress of 4680 mass production, Tesla said that the weekly production capacity of Cybertruck equipped with 4680 batteries is more than 1,400 vehicles. In the future, by further reducing costs and gradually achieving the cost parity target set at the end of the year, production capacity will further increase. Cybertruck "is expected to be profitable by the end of the year."

According to the original plan for the 4680 battery, Musk's ideal is to reduce the battery cost by 50%. Previously, it was reported that Tesla was considering stopping the production of 4680 batteries at the Giga Texas plant in Texas. Now it seems that the goal of landing the 4680 battery is being achieved step by step.

So, can domestic companies keep up?

Double dry method is done?

Tesla officially launched the 4680 battery at Battery Day in 2020. At that time, the main expected effects were a 5-fold increase in single-cell capacity, a 6-fold increase in power, a 16% increase in cruising range, and a 14% reduction in the cost per KWh battery cell.

However, the development of 4680 was fraught with difficulties. In the past five years, the Texas factory has produced only 50 million 4680 batteries so far, which is a drop in the bucket compared to the sales of 1.8 million vehicles in 2023. For this reason, Baglino, the person in charge of 4680 batteries, resigned (some say he was fired by Musk).

However, at this earnings conference, the 4680 battery clearly ushered in a huge turnaround and achieved a technological breakthrough.

The more important technology of 4680 battery is the dual dry method (dry positive electrode and dry negative electrode). Because if you want to achieve the cost target at the end of the year or lower the cost target of third-party procurement, the dual dry method is the fundamental way.

It is reported that Tesla plans to use dry electrode technology for production in Q4 this year, which will significantly reduce costs and achieve the original goal of the 4680 battery plan. (The dry electrode technology was acquired by Tesla in 2019 when it acquired Maxwell for $218 million)

Tesla had previously solved the production problem of dry negative electrodes. Because the negative electrode is made of a softer graphite material, it is easier to press and mass production was achieved quickly. However, since the positive electrode is made of very hard metals such as nickel and cobalt, the dry positive electrode has also become the biggest difficulty in mass production of 4680 batteries.

However, it seems that this time, Tesla has finally solved the problem of dry cathode. If the problem of dry cathode is solved, 4680 will be soon.

Specifically, there was a report on the Internet that the Korean company PNT signed a "big order" with Tesla to supply dry electrode process equipment. In addition, PNT has completed the production of the first batch of dry process equipment, which has been delivered to the Texas factory. The dry process equipment used by Tesla before was provided by the German company Saueressing.

Musk's initial goal for the 4680 was to mass produce it in 2021 and reach a production capacity of 100GWh in 2022. Although it is late now, it is still here. As I mentioned in my previous article "4680 Battery, Can't Stop at All", according to the first principles, Tesla will only accelerate the evolution of the 4680.

According to the information disclosed by Tesla this time, many things can be confirmed. One of them was revealed by the public account "Cai Shen Dao". In October last year, it was learned that Tesla's dry cathode entered the C sample and the mass production efficiency was 50 meters/min. Now it seems to be accurate.

Moreover, the mass production of 4680 by the "dual dry method" has started, and the goal is to climb to the level of dry negative electrode in the fourth quarter. However, although the dual dry method can logically achieve lower costs and the preparation cost will be greatly reduced, the product yield still needs to climb, and it should not be too fast.

According to an analysis by Ahn Hee-soo, a researcher at South Korea's LS Securities, "Tesla's Texas factory has produced a total of 50 million 4680 batteries, but the yield rate is still 20% short (that is, only 80%)." But even if it starts to climb from 80%, it is something that competitors cannot ignore.

Of course, Musk’s boasting is about to come true, which also puts pressure on domestic companies and forces them to speed up.

How to deal with shock waves

What disruptions and impacts will the large-scale production of the double-dry method bring?

In fact, Tesla has laid the foundation for the electrode preparation of all-solid-state batteries, especially the production of sulfide solid electrolyte membranes and pole pieces that are sensitive to moisture. Moreover, the production efficiency will be higher and the footprint will be smaller.

The cost of dry-process lithium batteries can be 50% lower than that of current lithium batteries. This will make the dream of further reducing the cost of battery preparation about to be realized. However, previous experience can no longer be used.

The realization of the dual dry process also means that the goal of saving 38-40% of dry process energy consumption is achievable. This is mainly because the dry process does not use NMP (one of the most commonly used lithium battery auxiliary materials and a solvent for PVDF binder) and does not require large-scale recycling equipment. If NMP is no longer used, manufacturing costs can also be reduced significantly.

In addition, in this financial report, we also saw that the Optimus humanoid robot is already being used on the 4680 battery production line, which is also a very important signal for cost reduction.

We know that the 4680 battery is the core factor in whether it can promote the mass production of cheap models, and it is also the source of its ability to continue to increase gross profit margins or engage in price wars. Now that humanoid robots have also been introduced, it seems that the fun has begun.

In terms of production capacity, according to Tesla's current 4680 production capacity plan, it has three main production plants and one experimental plant, namely: Kato Road Plant, Fremont Plant, Nevada Plant with a planned production capacity of 100GWh, and Texas Plant with a planned production capacity of 100GWh.

At present, Tesla's Texas factory may accelerate its own production, and the other three factories will also follow suit (currently in the debugging and installation stage), plus LGES and Panasonic. The start-up of these production capacities will be enough to change the entire industry landscape.

In addition, Tesla's plans have not changed, as it plans to sign a supply contract worth 6 trillion won (about 4.1 billion euros) with LGES in the second half of 2024 to purchase electrodes for its own battery cells on a large scale.

According to the Korea Economic Daily, the delivery of electrodes to Tesla will begin in 2025 and last for 6 to 7 years. The agreed quantity will be enough to provide batteries for about 1.3 to 1.4 million electric vehicles per year.

All in all, we know that Tesla is rushing down the road of 4680 batteries. "Although it is late, it will not be absent."

For reference, in terms of cost, the price of domestic ternary lithium 46 large cylindrical battery cells is about 0.65~0.7 yuan/Wh, which is nearly twice the price of square shell LFP batteries. The cost cannot compete with them and needs to be continuously reduced. Although BMW, Volkswagen, GM, Weilai, JAC, Changan and other OEMs have followed up and laid out 46 large cylindrical battery projects, there is still no ideal effect.

This financial report release has changed the situation of 4680. Obviously, Tesla has overcome technical difficulties in the production process such as full-ear cutting and folding, collector plate welding, and uneven coating of dry electrodes, and the yield rate has also been improved. Although it has not reached the ideal 300PPM (300 per minute), it has made great progress.

Under the shock wave of this information, in addition to NIO and Honeycomb Energy, there are also Yiwei Lithium Energy and BYD Battery that have already started mass production, CATL that has planned 8 production lines totaling 12GWh, BYD that makes 4680 LFP, Guoxuan High-tech that has just launched the high-nickel ternary star battery, Xinwangda, Penghui Energy, Chuangming Battery, Haichen Energy Storage, Weilan New Energy, and China New Energy, all of which will generate new pressure and motivation.

However, an industry expert also told me, "It's enough to just look at the domestic information. How many companies are really investing a lot of money in dry-process electrodes? The basic process principles are understood, and the equipment is all multi-stage roller pressing. The real mass production depends on efficiency, yield rate and surface density COV. There is no problem with the test machine. Mass production (involves) formula, process, and equipment. It's not about worshipping foreign things. Let's wait for Tesla to come up with it before we learn."