Tesla taps Asian partners to address 4680 battery concerns

L&F

10/03/2023 11:00

(Repeats for wider distribution)
       March 10 (Reuters) - It's crunch time at Tesla Inc
 TSLA.O , where Elon Musk is looking to crack the code for
making better, cheaper batteries.
    The electric-vehicle maker is recruiting Chinese and Korean
materials suppliers to help lower the cost and boost the energy
of its newest battery cells, even as the company struggles with
battery-related performance and production issues that have
helped delay the launch of its futuristic Cybertruck, according
to people familiar with the plans.
    Tesla has tapped China's Ningbo Ronbay New Energy
 688005.SS  and Suzhou Dongshan Precision Manufacturing
 002384.SZ  to help trim materials costs as it ramps up
production of 4680 battery cells in the United States, according
to the sources, who asked not to be named. 
    The details of these arrangements have not previously been
reported.
    If the Austin, Texas-based EV maker is able to work out the
performance and process kinks and meet its ambitious production
targets, the 4680 ultimately could be the linchpin - rather than
choke point - in CEO Musk's dream of building 20 million
vehicles annually by 2030.                
    Neither Tesla nor Musk could be reached for comment.
    As part of its efforts, Tesla also has signed a deal with
Korea's L&F Co  066970.KQ  to supply high-nickel cathodes that
could increase the energy density of its 4680 cells, one of the
sources said. 
    The automaker aims to augment its own output with 4680 cells
from Korea's LG Energy Solution  373220.KS  and Japan's
Panasonic  6752.T  - an insurance policy to secure future EV
production, two of the sources said. LG and Panasonic are
expected to supply cells for Cybertruck, one of the sources
said.
    A shortage of batteries means "the factories stall," Musk
told investors in early March. 
    The new battery is expected to play a key role in the launch
late this year of the edgy, stainless-steel Cybertruck, the
company's first new model in more than three years.
    Tesla had considered three battery options to ensure that
launch is not delayed again: smaller 2170 cells used widely in
other Tesla models, 4680 cells and less-expensive lithium iron
phosphate cells, but the EV maker favored waiting until the 4680
cells are ready, the sources said. 
    Details about Tesla's Cybertruck battery strategy, including
use of 4680 cells and consideration of other options, have not
been reported.
    In 2022, Musk said he did not expect 4680 batteries would be
a "limiting factor for Cybertruck or anything else." 
    The Tesla-designed 4680 cell - so named for its external
dimensions (46mm diameter, 80mm length) - is crucial to future
production plans. Tesla intends to make versions at factories in
Texas, California, Nevada and Berlin for use in vehicles from
Model Y to Cybertruck, the sources said. 
    But Tesla is still struggling to ramp up the first wave of
production, Musk acknowledged at Tesla's investor day on March
1. 
    
    'TESLA IMPACT UNDERESTIMATED'
    Despite the immediate problems, some analysts remain
optimistic Tesla will resolve these issues. 
    "While execution risk remains and many details are unknown,
Tesla's impact on the global battery industry may still be
underestimated," Morgan Stanley said after investor day. 
    Musk first announced the new cell at Battery Day in
September 2020. At that event, he promised a 50% reduction in
cell cost through a series of innovations, from a larger cell
size to a new "dry" electrode coating process that could
dramatically reduce the size and cost of a battery factory while
boosting cell performance. 
    Repeated delays in moving the new cell from the initial
prototype phase to full-scale production also have pushed back
introduction of the long-awaited Cybertruck, which was designed
to take advantage of the cell's potential improvement in energy
density and power - advances that have yet to materialize.
    But it will take time for suppliers to ramp up production.
    Panasonic is running a pilot 4680 production line at its
Wakayama factory in Japan, and plans to start volume production
later in the fiscal year that ends in March 2024.
    Shoichiro Watanabe, chief technology officer of Panasonic
Energy, last month said the company's new Kansas battery plant
will focus initially on 2170 cells, but it will eventually shift
4680 production to North America.
    Last year, LG said it planned to open a new 4680 production
line at its Ochang plant in Korea in the second half of 2023.
    Tesla's first-generation 4680 cells, built at its Fremont,
California, factory, failed to hit an energy density target,
people involved say. 
    The automaker so far has been able to dry-coat the anode -
the negative electrode - but is still having issues with
dry-coating the cathode, where the most significant gains are
expected to be made, the sources said.
    Tesla's attempt to ramp up production of the dry coating
process has thus far resulted in enough batteries only for about
50,000 vehicles annually, Musk and company executives have said.
    In 2020, Musk said Tesla would have enough 4680 capacity
in-house to supply 1.3 million Model Ys.
    While executives said it seems likely Tesla will be able to
increase 4680 output five-fold by year-end, the company is
hedging. 
    Musk is betting if Tesla ends up with too many batteries
this year, that is a good problem to have. It can use those for
the energy storage systems it sells to utilities and consumers.
    Tesla also has been installing first-generation 4680 cells
with "wet" cathodes in so-called structural packs in Texas-built
Model Ys. A majority of those vehicles use the older 2170 cells.
    Tesla plans to use a cathode with more than 90% nickel in
the next generation of 4680 cells, two sources said. L&F is
expected to be one of the suppliers of that high-nickel cathode,
another source said.

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Tesla 4680 battery’s secret sauce: Dry electrode coating   
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FACTBOX-Tesla investor day gives a rare look at executive bench 
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ANALYSIS-'Unknowns' delay Tesla's ramp-up of its own
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FACTBOX-Tesla cuts prices globally in a bid to spur demand   
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FACTBOX-Tesla CEO Musk to unveil Part 3 of Master Plan at
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EXPLAINER-What's known about Tesla's "Project Highland"?   
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 (Reporting by Zoey Zhang in China and Hyunjoo Jin in San
Francisco; Additional reporting by Norihiko Shirouzu in Austin,
Texas, and Daniel Leussink in Tokyo
Additional reporting by Paul Lienert in Detroit
Editing by Ben Klayman and Matthew Lewis)
 ((Paul.Lienert@thomsonreuters.com; mobile +1 313-670-2452;))