I have been talking about 4680s potentially being introduced into the new Model S Plaid
and Long Range. I have done some reasonable research into the new battery pack, and it
looks like something is not adding up.
Why do I care so much though, so what if they are using the 4680 or 18650 batteries, what
difference does it make if they are still generating this outstanding performance, you
might ask yourself. Well good question.
As far as I am concerned Tesla have bet the future of the company on their success with
the 4680 battery. This battery is so important to the rest of the future, any clues we are
given to its success are a big deal. When the other auto companies catch up to the 2170
battery form, this will jump Tesla further ahead again. Providing Tesla with a battery
that has much lower cost, along with other great features. But its not just the cost
saving, or i.e. higher profit margins from car sales. Its also the fact that they require
nearly 1/10th the size of a factory to manufacturer these batteries. Meaning they can potentially
scale the battery production possibly 10 times faster than any of the competition, just because
of this fact alone.
The 2170 form was a fools errand. It simply was not feasible to scale. This was discovered
early on they had to find a better way to make batteries. Tesla soon purchased Maxwell
Technologies, a company that was bought for their dry electrode coating technique, which
significantly reduces battery production time, space, cost and is better for the environment.
However, it looks like the competition will follow a similar chemistry and design to the
2170, and will again be another reason why the competition can't grow at Tesla's speed.
The old battery technology will just hinder their growth too much, with the lack of ability
to ramp, unlike Tesla's 4680 batteries.
The future of everything rides on the 4680 batteries. Tesla have built the Texas and
Berlin factories, to only use 4680 batteries. Once these factories are ramped up, they alone
might do in the region of 8 times the number of deliveries from just last year. 8 times
the number of products sold, just from last year. That is a huge leap in numbers, especially
in such a capital intensive industry as car manufacturing.
Hence why it's such a big deal to get any inkling as to whether the 4680s are actually
in production, and as to what level. Elon said by Q4 Tesla should be doing 1,000 Model
S's a week. If Model S uses 4680s, then that is likely over 100 MWh a week of batteries
in the Model S. Scale that up, and we are talking around 5 GWh a year. Of course this
is the Model S, we obviously expect the Model X to follow soon enough with similar numbers.
Implying that Tesla are quite possibly going to be around 10 GWh a year for 4680s from
Kato Road, to serve the Model S and X. Now is that so hard to believe? We were expecting
this level of output from Kato Road by about this time, or earlier even. And I have to
ask you again, would it not make a lot of sense to use the batteries in a factory very
near where the batteries are produced. The Kato Road facility is walking distance to
the Fremont factory. It makes sense on so many levels to be incorporating 4680s into
your 2 top of the range products, while the line has been down half the year.
And supposedly guests at the event asked employees what batteries they were using, and the Tesla
employees said 18650, but we don't know how credible these employees are, and I find it
really unlikely they would be allowed to give out major secrets like that so casually. Supposedly
someone did ask Franz if they were 4680s, and he just gave somewhat a smug smile apparently.
So you can read into what people are responding to as much as you like. But there is real
data here saying that whatever Tesla have done, it's created a step change in specifications.
There is no denying that.
But think from a business stand point what would make more sense. a) to use your brand
new batteries, in the quickest car in the world, whilst the line has been down for 6
months, and the batteries are made just down the road, charge a huge profit margin for
the cars with them, when your batteries are to a good enough level, with a car that has
a relatively small number of units sold a year.
or b) invest some extra time, money, r & d and resources, in improving the chemistry
of your oldest form of battery, taking down the production line for half a year, only
to have to take down the production line again later to replace to 4680 in a couple of years.
I don't see any point on investing in improving the 18650 batteries, and especially not the
level of making them the quickest car in the world. It's too big a step change. It simply
means now if they wanted to, whatever these changes they have made, they could also make
them to the 2170 batteries, if this was the case, and improve the performance of them
a step change too. On the other hand, if it is still the 18650
batteries then these new changes they have done, will also be apparent in the new Model
Y factories, which would then mean when they get 4680s, structural battery packs, and casting
molds, then the 4680 batteries are going to be that much better again than we expected.
Which sounds too unlikely. I mean really the amount of engineering required to get the
18650's to become tabless is just insane to comprehend Tesla would have gone to these
extremes.
I know it's almost too good to believe that Tesla are possibly using the 4680s, but I
think there is a 70% chance they are. But this is such a big deal because if they have
proven to hit 10 GWh a year run rate, it means they have their battery line operational.
They just needed to refine it before they copy and paste these battery factories around
the world.
If Tesla can supply the 4680 batteries in time for Texas and Berlin, then once Tesla
have demonstrated they can competently do that, just as they demonstrated they could
ramp up the model 3. Then the stock price will enter its next cycle, and likely trade
between $1500-2000, until there is something else to further catalyze the company. I think
I would like to start seeing 50k units of Model Ys coming out of Berlin and Texas factories
each, perhaps by Q2. I think that will be a good indicator. Even if Tesla are still
struggling with the Cybertrucks by then, the batteries are more important.
The lifeblood of this company is not depending on the cybertruck, if Tesla pull that off,
its amazing engineering genius, and will do well for the company. But the real life of
Tesla, currently, is about the Model Y. This car is in so much demand, even Elon said it
will be the biggest selling car. It's in so much demand, they stopped selling the standard
range. It's also cheaper and faster to make than their other models due to all the die-casting
and the structural battery packs. Why do you think it's Model Y first from Texas and Berlin.
Because that's the car that makes so much more profit margin, and sells to the masses.
Don't get me wrong cybertruck will be amazing. But Model Y will be Tesla's main money maker.
And it will come down to how fast they can ramp up the battery production. Next year
when we look at delivery numbers, it will all be about just how fast the ramping up
will occur from Texas and Berlin. The stock price will likely be a lot more jumpy when
we see Tesla's delivery numbers grow and reach similar numbers as the legacy autos.
This is why it's such a big deal if Tesla are already using their 4680s in Model S already.
And sure I have heard some people give reasons as to why we are seeing these weight discrepancies,
but I haven't seen anyone else do a full break down on the math, or explain the discrepancies
between the new Model S Long Range and the Plaid weights. Some people may say I am looking
too deep into this, but this is what serious stock analysis looks like. When the Model
3 was going through its ramping up stage, there were companies taking daily aerial photos
of the Fremont car park, to count how many cars were being produced, to get a rough idea
of the production numbers. I think it was actually mainly the shorters paying for these.
You need to look at anything you can to get an idea of what may be happening in the company.
Thanks