Alright, it looks like we are getting some very exciting information, or perhaps I should
say more potential evidence that my theory on Tesla's plans for energy, model 3 and model
y are correct.
Let's start from my entire theory on all of this.
As we know, or at least most of us do, is that EV growth is constrained by cell and
battery supply, there simply are not enough being produced to make enough EVs for everyone.
On top of that they are expensive, and they take a long time to manufacturer, and require
enormous factories in order to do so.
Like we saw with Giga Nevada.
Then there was a break through with LFP cells, and China went hard out building LFP cell
factories, namely CATL, and BYD also making their in-house cells too.
This was a lower cost cell, that was much easier to produce over the cells with nickel
based cathodes.
The disadvantage of LFP is that it is less energy dense, and thus limits range of electric
vehicles, or means you have to have a really heavy battery pack in order to achieve a decent
a range, which affects performance, handling and braking.
If the vehicle is able to achieve a more efficient drive train, then it is capable of getting
more range and performance from the same size battery.
Tesla's drive train is second to none, hence the range they achieve with smaller batteries
compared to most.
CATL announced their new cell and battery.
The M3P cells, and Qilin battery.
These M3P cells are often referred to as LMFP, but that is actually incorrect, which would
be a lithium manganese iron phosphate battery.
People inferred this due to the fact that M3P cell is indeed using manganese in the
cathode.
What the M3P cell actually is, is a hybrid of LFP and a ternary cathode containing manganese,
zinc and aluminum.
Note it doesn't contain cobalt or nickel.
All high energy dense cells still contain cobalt.
Due to this hybrid, CATL were able to obtain a more energy dense cell than LFP, offering
the much additional energy density, can make all the difference.
And on top of that, also at the same cost as traditional LFP.
This essentially means that EVs can now get longer range with lower cost cells, and might
provide an adequate sweet spot of range for many vehicles, that was only previously achieved
before, with the more expensive and rarer nickel based cells.
Which is why I have been saying for sometime, what a big deal these cells are.
It will mean we have vehicles capable of ranges in excess of 300 miles with lower cost cells.
This probably saves around $3,000 per battery to hit that same range, that wasn't before
possible without nickel cells.
And I think 300 to 330 miles of range is going to be sufficient enough for the vast majority
of drivers.
I know some people have this idea that EV ranges will only get better, and in several
years time we will be getting 500 miles.
But I don't think that will be the case.
If anything they may reduce, as charging gets faster and chargers become more ubiquitous,
in order to get costs of EVs down.
Which is what this is all about, if we want mass EV adoption, then it will come down to
cost.
Now from time to time, I have been mentioning updates on the new CATL factory that is has
been going up over the last year or so.
As it was initially meant to have an 80 GWh capacity, and could even be as high as 100
GWh a year of production.
Tesla is CATL's biggest customer by a long way, and without 4680 cells in high volume
production, Tesla depend on CATL for cell supply, as Tesla need a lot of cells, and
like were saying before, is that the other cells, take far too long to make, and require
enormous factories, whereas LFP are much simpler and can be ramped up in higher quantities
at lower costs.
So Tesla totally depend on CATL for large supply of cells.
Now Panasonic are ramping up their own 4680s too, but only at around 30 GWh a year, which
isn't really close to the levels that CATL can produce.
CATL recently retrofitted an old factory down the road from Giga Shanghai, that reached
60 to 80 GWh too, of LFP cells, and that is what is responsible for the increase in Model
Y and 3 production from those factories, along with the energy supply, and why Tesla were
announcing they finally have enough cells.
But the thing about this new factory that really caught my attention, is that it is
also across the road from Giga Shanghai.
Call me crazy, but that is why I assume that Tesla will be benefiting from this new factory
that CATL have built, and that it is to supply Tesla.
And with CATL's new M3P technology, which like we said, is more energy dense than LFP,
yet the same cost, then it would only makes sense that that is the cells that they are
producing at this factory, and thus supplying Tesla.
Now the new CATL factory is ramping and will take time to reach capacity, and it is not
even fully built yet either.
https://electrek.co/2023/06/29/tesla-model-3-rumored-new-catl-m3p-lfp-cells-longer-range/ But now we are getting the headlines that
the new Model 3 Highland will be using M3P cells, as part of the update.
It is supposedly now a 66 kWh battery, compared to the previous LFP 60 kWh battery, presumably
the same size, but the additional 10% more energy density gives the batter that much
more energy.
This is going to be quite a bit more range.
It will easily be over 300 miles.
This is for a rear wheel drive version still.
So imagine if the Model 3 Highland comes out with over 300 miles of range, along with this
new facelift and other features like hardware 4.
Tesla will be able to raise the price I would say, yet possibly the cost might not have
increased by much, as there were a lot of cost saving updates involved too.
However, like I said at the start CATL also have a new battery, the Qilin battery, which
is actually a structural battery pack, using the cooling ribbons as structure, rather than
the actual cell, which would result in further weight saving.
So I don't know, the range might be in the low 300 miles.
That is some serious range, for what might still be a relatively low cost car.
So this could be huge.
As I was saying this was my theory not just for the Model 3, but the Y and energy.
What happens when Tesla moves over to these new batteries for their Model 3s in Shanghai?
Well it means they will replace the old LFP batteries.
Now what do you think Tesla are going to do with all these excess LFP cells that they
no longer require in the new Model 3?
They will shipped to Lathrop, to be used in the Megapack factory.
The Megapack factory can only ramp as fast as there are cells, because like vehicles,
energy is also cell constrained.
Tesla will use the more energy dense M3P cells in their vehicles, and use the old LFP cells
in energy, which is fine, because energy density is not important for energy storage.
So this will mean we should also get to see some ramping when it comes to the Megapack
factory, once this is all in place.
As for the Model Y, well obviously the same will happen there too.
In fact we already knew it was going to occur, and is known as the Model Y Juniper update,
the equivalent of the Highland.
It will get a facelift, all the other features, along with this new battery pack.
Which should take the Model Y perhaps to around 260 to 270 miles of range, for the rear wheel
drive.
Which is going to make a big difference.
In fact it might even mean it is also suitable for the US market.
So as the CATL factory ramps up more M3P cells, there will eventually be enough to go into
all the Model Ys in the Shanghai factory too.
If the target was 80 GWh a year, then that seems to be about right.
And then there will be a lot of additional LFP cells available for energy storage, in
fact likely too many, more than Lathrop could actually handle.
Which is why Tesla is building the Shanghai Megapack factory too, which will be able to
build enough Megapacks for this additional LFP supply.
I mean the math all works out too.
A new 80 GWh cell factory, and 2 40 GWh Megapack factories.
Anyway, I am really glad that it looks like my early predictions were right, and that
I still have a good understanding on how this business works.
It's still
all about batteries.