I'm sorry if you have had enough of my talking about batteries, but the more I come to understand
what the 4680s have achieved, the more it impresses me, and adds to my conviction on
the stock.
I try and explain my finding as best as possible to you, and as to what it means to the company
or stock price.
Even to this day, I am still getting my head around the break through technology in Tesla's
4680 cells.
I have said before it's like an onion, with layers and layers of information.
Although I felt like I was getting close to the core by now.
But with people starting to do tear downs on the cells, and hearing more information
from 4680 Model Y owners, more ideas are starting percolate inside my head.
I wanted to discuss some of these latest ideas, to establish even further just how amazing
this cell is, and what it means compared to the alternatives.
COMPROMISE Firstly when it comes to batteries there is
always some sort of compromise in everything.
For example cost, you can have iron phosphate cathodes at much lower cost than nickel, but
then you sacrifice energy density.
There are trade offs everywhere, you want more power, then you lose range.
You want faster charging speed then you get more degradation.
You want silicon for more energy density, then more degradation too.
Of course battery safety matters too.
For example a pouch battery can be lighter than a prismatic, but we saw the issues that
GM ran into with those.
The trick is finding the right balance, for the right application.
For manufacturing too, if you want an easier cell to manufacturer then you use prismatic,
but the production speed is slower.
And this is where Tesla differ from everyone else.
They are attempting much more complex manufacturing techniques, to give these advantages at finding
sweet spots everywhere.
For example Tesla are still able to get exceptional power without sacrificing range too much.
Other than that, there really hasn't be any major break-throughs since the initial lithium-ion
battery was first invented, perhaps adding silicon might have been.
There tends to be somewhat of a narrative that people think that battery technology
will simply improve, and perhaps every year energy density will improve 5% or something,
and that legacy will eventually catch up to where Tesla are today, and then be able to
have a more even playing field.
But no, this is kind of it, we pretty much have to work with what we have got.
Until the 4680, I think the 4680 has actually made some serious break-throughs.
These break-throughs give Tesla a massive lead.
However it's not so much the break-throughs themselves that have reduced costs and improved
energy density, it's more that they have allowed Tesla to rethink the battery from first principles.
The 2 break throughs are dry battery electrode process and tabless design.
Due to these two break-throughs it allows more creativity in design, due to not being
held back so much with things like thermal management.
THICKER ELECTRODES Something that Jordan from The Limiting Factor
discovered, during his tear down of the 4680 cell, was that the electrodes were about 20-25%
thicker than the 2170 cell.
I have been thinking more about this, and starting to realize exactly what it means,
or what it means for now, until we discover another level.
And that's kind of how genius these cells are, the way it all keeps coming together
on more and more levels, to understand just what Tesla have done here.
However, having thicker electrodes, well think about it, what does it mean?
It means there is going to more electrode in the cell relative to everything else.
In other words there is less aluminum, copper, and separator required in the cell relative
to actual energy capacity.
All the elements are not contributing anything to the power of the cell.
Yet they still something, and they still weigh something.
ENERGY DENSITY Energy density of a cell is all about how
many ions you can fit in.
Lithium is such a great element is it is very light and a small atom, so more of lithium
ions can fit into a cell, compared to other elements.
This is why the lithium ion battery has done so much for technology.
It all comes down to how many ions you can fit into the cell.
And like we discussed silicon before in the anode, can take on more ions, but expands.
Whereas graphite is much more durable, and cells like the 2170 use a graphite anode,
with only a little bit of silicon, under 5%.
The same with the cathode, iron cathodes not able to take on as many ions as nickel.
Anyway, using a thicker cathode and anode means there is more relative electrode within
the cell, which would obviously mean there can be more lithium inside too, but like we
said, more of the other elements are not required, for example the separator does not need to
be any thicker.
Therefore a thicker anode and cathode means better energy density, and fewer other elements
required, thus reducing cost.
How is this achieved though?
Well we know that the cathode is still not using the dry battery electrode process, so
that's not the reason.
It's due to thermal management.
As the electrodes are thicker, it means the ions have further to travel, which could create
thermal management issues.
But that's the whole point of the tabless cell.
It is so brilliant as it's like there is a tab everywhere for the cell, and thus can
travel such a shorter distance, and not create thermal management issues.
Thus resulting in thicker electrodes and more energy density.
This might be why we are hearing 4680 cells may have similar energy density to 2170 already,
even though 2170 is using silicon and 4680 is not.
And some reports have said that the 4680 may even more more energy dense than the 2170
cell.
Perhaps the thicker electrodes make that much difference.
Along with the other magic in a 4680.
DBE Like the dry battery electrode processes.
Now yes, although Tesla have not supposedly quite sussed the dry battery electrode process
for the cathode yet, at least at higher production rates, we have seen it for the anode, and
had tear downs of it.
Also just a side note, it sounds like the anode would have actually been harder to achieve
as a dry battery electrode, than the cathode too, which is possibly a good sign.
In addition to that there isn't the usual binder required with the dry technique when
compared to the wet slurry technique.
This improves conductivity and energy energy density more as well.
I can't go into too much detail about that, as I don't understand it well enough yet.
But I am still researching more continually, and doing my best to understand what Tesla
are doing with cells, so I can explain the economics.
BIGGER CELLS Now we already understand that the tabless
design also allows Tesla produce larger cells, i.e. over times more volume than 2170, I have
gone over this a lot, so I won't go into much detail, but it means that larger cells need
less casing relative to electrode or jelly roll, so you have a lighter cell relative
to energy capacity, and you can produce them faster on the production line, with fewer
welds and processes.
STRUCTURAL Now we also know that structural packs mean
lighter weight and improved structure resulting in better handling.
Now I suppose in theory this is possible with cells with a smaller diameter too, i.e. not
4680 and thus not necessarily tabless either.
But Tesla have done other clever things for safety in order for them to be structural,
especially in the event of any thermal issues.
Remember the term structural pack gets thrown around synonomously with cell to vehicle integration,
which is not the same thing.
A structural battery pack is a battery that contains the structure inside the pack, whereas
Tesla's 4680 cells are the structure.
I also wouldn't have thought you could have cell to vehicle with prismatic.
I think the structural integrity would be vastly superior with cylindrical, similar
to a honeycomb structure, which is incredibly strong.
MORE BREAK THROUGHS There are more break throughs to come in the
industry too.
We potentially have solid state cells, or graphiene cathodes, yes carbon cathodes.
They just need to work out how to produce them at mass scale at low cost.
It feel like whoever can work out how to produce graphiene at low cost mass market will probably
be as rich as Elon Musk.
Kind of like how Henry Ford was the richest man in the world producing an affordable car,
like Elon producing an afforable EV, and then someone producing affordable graphiene will
be like Andrew Carnegie, who was also the richest man in the world from finding ways
of mass producing steel.
SUMMARY I hope I explained this somewhat well enough.
I am doing my best to understand it all, the better I understand it, the easier I will
be able to explain it.
I didn't come from a battery background.
I came from business.
But I think compared to the other analysts who understand the business and finances,
I have gone further than most into understanding how the actual batteries are working, in order
to truly understand Tesla's competitive advantage here, that I can then articulate back into
the business.
In order to relay it back into as how valuable it is to the company, how much it helps with
competitive advantage, cost and production capabilities in order to meet all that demand.
But like I say, I currently think that when Tesla hit high volume production on 4680s,
excluding FSD and other areas of the business, the stock price should triple sometime within
a couple of years.