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There have been a few segments of Tesla’s 2024 annual shareholder assembly that stood out to me as notably attention-grabbing with reference to Tesla battery manufacturing. The primary half was from Tesla’s major presentation, and I’ll begin with that. Nonetheless, the massive data really got here towards the tip of the assembly within the Q&A session.
To begin with, at 1:10:40, Musk states: “And we’re also innovating a lot in battery production with the 4680 that’s built right here. It is — it’s a hard problem, you know, like there are entire companies that just make battery cells. That’s all they do. But we’re making good progress. All the Cybertrucks that you see use the 4680 cell. And we have a clear path to the 4680 being, we think, probably the most competitive cell from a manufacturing efficiency standpoint.”
Effectively, that’s an enormous assertion there already — Elon Musk thinks Tesla’s 4680 battery cell can develop into probably the most aggressive battery cell on the market by way of manufacturing effectivity, which one presumes would assist it by way of cost-competitiveness as nicely. This assertion is mainly the teaser that led to the query on the finish of the assembly, however let’s maintain happening what was stated in the primary presentation first.
“But it is, it is a hard problem, I have to say. There’s quite a lot of brain damage that’s required to be good at cell manufacturing. Hahaha. It’s like a brain damage high. Hehehe. But I think it does — it does give Tesla resilience if there are changes in the, I don’t know, geopolitical situation, somehow. Haha. But it’s good to have some independence in cell manufacturing.”
Certainly, one wouldn’t wish to be beneath the thumb of China an excessive amount of if geopolitical points between the US and China heated up. Tesla’s battery provide from China may then dry up. Certainly, that is one essential motive for necessities within the Inflation Discount Act of 2022 that Democrats and Joe Biden handed and signed into regulation that purpose to make US automakers and the US economic system much less depending on Chinese language batteries and battery supplies.
“And we’re making steady progress. And we also have the cathode refinery, which you can see behind the main factory. So, you can sort of see in the picture there. That’s the cathode refinery. And then we’ve got the lithium refinery in South Texas. So, we’re just kind of making sure we’ve got the pieces of the puzzle.”
So, in brief, it’s notable and spectacular that Tesla is engaged in its personal cathode and lithium refining.
“If you were to look at sort of a video of how Tesla does, say, cathode and lithium refining, and how the rest of industry does it, it’s night and day. I mean, you can sort of eat off the floor in the Tesla refinery, and I would not recommend doing so in the others.”
Wowza!
“So, it’s very — we’re definitely going very vertical here. But I think this is a, it’s a wise investment that will pay off more than people realize.”
That was it from the primary presentation — definitely attention-grabbing, however nothing groundbreaking or new.
Towards the tip of the occasion, although, one questioner famous that it had been 4 years since Battery Day and requested for a bit extra data on the 4680 battery cells and Tesla’s targets to make the battery extra reasonably priced. Right here’s the place issues bought attention-grabbing, after a little bit of chatter concerning the total market. Musk notes:
“So, attaining affordability is definitely at this level, um, extra about the remainder of the automotive than it’s really concerning the battery pack. The value per kilowatt-hour of cells from suppliers has dropped dramatically. So, there was an enormous spike for a number of years in the price of lithium-ion cells from suppliers as a result of each automotive producer put in gigantic orders for battery packs — like large, large orders. So the value of, like, of lithium and all of the uncooked supplies and the battery cells went loopy — it doubled. Like, the value of cells doubled. Value of lithium I feel went up, nearly like, 5-fold or like 500% — like went up loopy numbers.
“So, since then, the demand — like, battery cell suppliers have increased their supply, and, um, the orders from other car manufacturers have declined. So, I mean, it is worth noting it’s tough sledding out there for EVs. […]”
He then talked a bit concerning the “game of pennies,” decreasing numerous little prices by pennies. After which he made the statements that basically jumped out to me, so I’m going to daring this entire subsequent part.
“Now, with respect to our personal cell manufacturing, we do see a path to value parity by the tip of this 12 months — a really troublesome path to value parity. At the moment, our 4680s value greater than our suppliers’. Now, they value greater than the suppliers’ immediately, however they value lower than the suppliers’ a 12 months in the past. So, you recognize, there’s a little bit of a feast–famine factor with battery cell provide. It’s form of like for DRAM chips — you recognize, like, the DRAM business goes from like oversupply to undersupply; the value of DRAM adjustments like loopy. It’s form of like that for cells. Um, so, however we anticipate to realize value parity even with the a lot decrease provider cell worth immediately by the tip of the 12 months.“
That is probably an enormous deal. The reason is sensible — we’re all conscious of the boom-bust cycles of know-how and scaling up new industries. Even simply in cleantech, we’ve seen it with photo voltaic panels, wind generators, battery cells, and lithium. So, it’s comprehensible that the battery business hit a interval of oversupply and Tesla’s 4680 battery cells weren’t as aggressive because it’d been assumed they’d be. However the information that Tesla has certainly been making progress on them and driving down prices, and the corporate expects them to be value aggressive by the tip of the 12 months, is definitely notable. After all, there’s the query of whether or not the massive canine within the battery business (CATL, LG, SK On, and many others.) are going to proceed innovating and driving down prices quicker. However I’ve to say that I’m extra optimistic about Tesla’s battery developments from the tip of this lengthy response to the query than I’ve been … since Tesla Battery Day 4 years in the past? We’ll see what occurs.
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