Introduction:
Tesla CEO Elon Musk recently highlighted the challenges and opportunities faced by the company during the annual shareholder meeting. One key aspect that has yet to materialize as expected is the dramatic cost reduction of Tesla’s 4680 cells, which was anticipated to revolutionize the company’s trajectory and enable the production of more affordable electric vehicles. Despite Musk’s optimistic projections, Tesla’s signature battery move has not yet delivered the promised cost savings, raising concerns about the company’s future competitiveness in the EV market.
Battery Day and 4680 aimed to halve the cost
The 4680 cells were positioned as a game-changer for Tesla during the September 2020 Battery Day event. Musk had outlined ambitious goals to cut costs by half compared to suppliers and even supply the breakthrough cells to other automakers. However, nearly four years later, Tesla is still struggling to achieve cost parity with its suppliers, with current prices exceeding those of external providers. While Musk remains optimistic about reaching cost parity by the end of the year, the delay in cost reductions has impacted the company’s ability to deliver on its promises.
Comparing 4680 vs. 2170 – Panasonic
Musk’s acknowledgment that the 4680 cells currently cost more than those from suppliers underscores the challenges faced by Tesla in realizing its cost-cutting goals. The volatility of EV battery prices, coupled with the feast-famine cycle of battery cell supplies, has made it difficult for Tesla to achieve the desired cost reductions. Despite expectations of reaching cost parity with suppliers by the end of the year, the reality is far from the initial projections made during Battery Day.
Tesla’s big battery bet hasn’t paid off—yet
The fluctuations in EV battery prices post-Battery Day have had a significant impact on Tesla’s cost-saving efforts. While prices initially soared, they have since declined, with projections indicating a further decrease in the coming years. The global glut in battery production, particularly in China, has shifted the dynamics of EV battery supply, making it challenging for Tesla to achieve cost savings with its 4680 cells. The lack of commitment from other major automakers to adopt the cylindrical format further complicates Tesla’s competitive position in the market.
Tesla Battery Day – Bigger costs less
Despite Tesla’s efforts to ramp up the production of 4680 cells, the cost savings promised during Battery Day remain elusive. While the company’s VP of engineering has provided updates on production rates, the reality is that achieving half the cost compared to suppliers remains a distant goal. The lack of widespread adoption of the 4680 format by other automakers further limits Tesla’s ability to leverage the cost advantages of its proprietary cells.
Conclusion:
Although Tesla’s 4680 cells were initially heralded as a breakthrough technology that would revolutionize the EV market, the reality has proven to be more challenging. The delay in achieving cost parity with suppliers has impacted the company’s competitiveness and ability to deliver on its promises of more affordable electric vehicles. As Tesla continues to navigate the complexities of the battery supply chain and production challenges, the road to cost savings remains uncertain. Only time will tell if Musk’s vision of a more cost-effective and sustainable future for Tesla will come to fruition.