Tesla 4680 Battery a game changer for Electric Vehicles

The Tesla 4680 battery is a game changing innovation that potentially could reshape the electric vehicle (EV) industry. This article explores its manufacturing location, advantages over the competition, cost savings, improved range, and its impact on Tesla's stock price and market capitalization.

Why the 4680 battery is So Good

The Tesla 4680 battery has emerged as a game-changer in the electric vehicle market, demonstrating Tesla's commitment to being the leader of EV technology. Tesla first announced its 4680 battery cells at Battery Day, September 2020 as a new tab-less battery cell with a bigger format with new chemistry, enabling cheaper and a longer-range for its electric vehicles. In 2023 4680 production levels have grown exponentially as several Giga factories begin to roar into full production producing it 10-millionth unit out of Giga Texas.

The Tesla 4680 battery refers to itself as a battery with a diameter of 46 mm and a height of 80 mm, named after its size. The shape is cylindrical, which is different from the mainstream square battery. To learn more in detail, read this article.

Why is a Tesla 4680 Battery better?

Tesla's new 4680 battery cell is larger than the current 2170 cell it plans to replace and has a higher density designed to store five times more energy, delivers six times more power and is cheaper to produce, while delivering 16 percent more driving range. According to Tesla's CEO, Elon Musk the goal is to make better, cheaper batteries to meet the ambitious targets of Tesla electric vehicle deliveries.

According to Tesla's 2021 impact report, its batteries are designed to last the life of the vehicle, which the company estimates as roughly 200,000 miles in the U.S. and 150,000 miles in Europe.

Tesla 4680 Manufacturing Locations

In the U.S. 4680 batteries are currently produced in California and Texas, and Tesla also expanded the Gigafactory Nevada near Reno to produce the cells. The Shanghai Gigafactory in China also produces 4680 batteries. Giga Berlin is being expanded to make the 4680 batteries as well. Combined, these Gigafactories are pivotal components of Tesla's global manufacturing strategy with a new factory in Mexico planned to start construction.

The 4680 cells have already made it into some Model Y’s being produced at Gigafactory Texas. For the first time, the automaker is using its own cells to support its electric vehicle production. However, Tesla is going to need so many, many more which is why it is partnering with its battery suppliers to expand production of the new 4680 cells to meet demand.

4680 Battery Partner, Panasonic

In October 2021, Panasonic, Japanese manufacturer unveiled its own 4680 cell version developed with Tesla. Panasonic now says that it has delayed volume production of the Tesla 4680 cell to implement performance improvements.

Panasonic's new CEO, Yuki Kusumi, said that it is prepared to make a “large investment” in producing Tesla's new battery cell if production proves successful.

The Japanese manufacturer said during its earnings results: “Mass production rescheduled to begin during 1H FY3/25 to introduce performance improvement measures that will further enhance competitiveness.

This would put volume production timeframe of the new battery cell at Panasonic between April and September 2024.

Tesla Lithium Supply

Over the last few years earning calls, Elon Musk has stated that refining Lithium is the equivalent of printing money and urged investment in refining. Lithium is a key component of the 4680 currently, although, Tesla has stated this most likely will change in the future. Taking his own advice, Tesla meanwhile broke ground in May 2023, for a lithium refinery, in Corpus Christi, Texas, making it the only U.S. automaker to refine its own lithium supply. This will ensure the Tesla vehicles qualify for available tax credits and will help smooth supply chain fluctuations or any geopolitical disruptions as most of the world’s lithium is refined outside the U.S.

CEO Elon Musk said the refinery will produce enough battery-grade lithium for 1 million electric vehicles by 2025, which would make Tesla the largest processor of lithium in North America.

4680 Battery Production Levels

Tesla has ramped production of the 4680 cells at Gigafactory Texas to support the production of the Cybertruck. LG Energy also announced plans to produce a new battery cell in the same format but without a clear timeline.

In June 2023 Tesla announced it had produced 10 million 4680 battery cells at Giga Texas. The automaker claimed the potential to reduce battery cost by over 50% with the cell new design. While this sounds impressive, (and it is) Ten million 4680 cells are enough to produce about 12,000 Model Y EVs or 10,000 Cybertrucks to put it in perspective. Giga Texas has produced more than 12,000 vehicles to date, but it has relied on cells from Tesla’s pilot battery factory in Fremont. The production of batteries at the Giga Texas location will significantly reduce time, logistics and cost.

PROS: Advantages over Competitors

The Tesla 4680 battery has several significant advantages over traditional EV batteries and other advanced battery technologies:

1. Increased Energy Density

The 4680 battery features a larger form factor, which allows for more active materials inside, resulting in higher energy density delivery This means that the battery can store more energy in the same space, leading to improved vehicle performance and longer driving ranges.

2. Faster Charging, longer life

The Tesla 4680 battery offers better thermal management (Less produced heat) and reduced internal resistance, resulting in faster charging times and longer battery life.

3. Simplified Manufacturing Process

As with everything Tesla the 4680-battery design streamlines the manufacturing process, reducing the number of parts and simplifying production. This lowers production costs, contributing to overall cost savings for Tesla.

4. Structural Integrity

The larger cylindrical format of the 4680 battery serves as a structural component of the vehicle, contributing to the car's overall rigidity and safety. This structural integrity is a key innovative element to safety performance and helps the car hold up in crashes. Protecting passengers.

CONS: of the 4680 Battery for Tesla

As it is a brand-new battery design, the technology of the 4680 battery is untested, and there may be technical immaturity and reliability risks. The more miles with Tesla cars using the 4680, the sooner these risks will be lowered as issues are discovered and resolved with over-the-air software updates.

Cost Savings and Pricing

The Tesla 4680 battery's simplified manufacturing process and increased energy density leads to significant cost reductions. By reducing the number of steps and components required to assemble the battery, production costs are dramatically reduced. The 4680’s improved energy density means Tesla can use fewer battery cells to achieve the same range, further reducing costs.

Combined these cost savings have a huge impact on the pricing of Tesla vehicles. With more affordable battery technology, Tesla can offer its EVs at more competitive prices, attracting more customers and stimulating higher sales volumes or maintain a lower price structure and improve margins.

Drive Range

The higher energy density of the Tesla 4680 battery directly translates to an extended driving range for Tesla vehicles. The longer ranges can reduce range anxiety for consumers, which is still play a purchase factor, creating buying friction for some first time EV purchasers, and makes Tesla cars more practical for everyday use and long-distance travel. This increased range is a key selling point for Tesla.

Impact on Stock Price and Market Capitalization

Since the announcement of the Tesla 4680 battery and its subsequent implementation start in Tesla's EV lineup, the company's stock price has experienced significant fluctuations. Initially, there was a surge in stock price as investors recognized the potential of this groundbreaking technology strengthening Tesla's competitive position in the EV sector.

However, like any technological development, there were challenges in the initial implementation, leading to some skepticism among investors. Factors such as production delays or technical issues may have contributed to fluctuations in stock price.

Once Tesla successfully integrates the 4680 batteries into its mainstream EV vehicles and has actual data to publish, it will be able to leverage the cost savings through lower prices and advertise performance improvements to sell more of its electric vehicles.

As Tesla is a growth stock, continuing to grow revenue and profits is important to investors. Tesla will have to continue to innovate so that it keeps the “cool” of ownership and sells more cars. On the positive side a recent poll indicated that 87% of existing Tesla owners are planning on making another Tesla purchase.

Final Thoughts

The Tesla 4680 battery has advantages over competitors, including increased energy density, simplified manufacturing, and extended ranges. The cost savings from this battery technology will allow Tesla to offer lower prices and sell more Tesla cars. As Tesla continues to refine its battery technology and expand its production capabilities, it looks promising for the company and its stock price grow over the long term. The global adoption of electric vehicles combined with the increasing awareness of climate change, provides an opportunity to have enough battery supply for Tesla to grow and deliver more cars and revenues over the competition.