I think it was around the end of last year when Panasonic unveiled a prototype, 4680
cell. It sounds like Panasonic have actually been working on this cell since potentially
before Battery Day, but at least since. Panasonic say the battery cell is designed
to meet Tesla's needs.
Then we hear the 4680 is progressing. Panasonic say that this cell was at the request of Tesla,
and is clearly for Tesla. Although they also state they are open to branching out to other
companies. But I think it's pretty obvious Tesla have
Panasonic increasing their supply of cells to Tesla.
Next we hear that Panasonic are going to go
into production on 4680 cells. They intend on investing around $700 million into a new
plant, and intend on manufacturing 4680 cells in 2023. The facility will have a capacity
of 10 GWh a year. Due to it having such a relatively low capacity, at least for this
day and age, this is most likely a pilot line, something equivalent to Tesla's Kato Road
facility. I mean 10 GWh isn't what we classify as extreme
scaling. Also the cells are being made in Japan, and Tesla would want them made locally.
It seems that that was then pushed out to 2024, before March, as it appears to have
been a difficult process. But Panasonic officially announced "its Energy Company will establish
a production facility at its Wakayama Factory in western Japan to manufacture new, “4680”
lithium-ion batteries for electric vehicles (EVs) in order to expand its business globally.”
And now a couple of weeks ago Tesla actually
received some samples of Panasonic's 4680 cells. Panasonic's CEO said "Panasonic, which
makes batteries for Tesla, said on Wednesday it had shipped samples of its more powerful
4680 format electric car battery to the U.S electric vehicle maker as it prepares for
a surge in North American power pack production." So Panasonic are already at the stage of sending
samples to Tesla to inspect.
I think at this stage we should clarify as
to what Panasonic's 4680 cell is. Firstly for those who don't know, 4680 is simply the
size of the cell, 46 mm diameter 80 mm height. 4680 only means that, it doesn't mean Tesla's
in-house cell, it just means the size of the cell. Now Tesla did come up with the 4680
first, and it is now somewhat conditioned that 4680 means Tesla's cells, which includes
the chemistry. 4680 is just the size of the can, what goes on inside the can is of a lot
more importance.
The only difference the 4680 size makes to the 2170 size, is the fact that there is significantly
more volume to fit the actual jelly roll inside, relative to the amount of casing.
In fact this table I think gives the best illustration of all the benefit of using 4680
cells. We can see the difference in vol/area ratio. It shows that for every mm2 of can,
it equates to 4.56 mm3 of volume for the 2170. Whereas for the 4680 there is almost 9 mm3
per mm2 of can area. Now that is pretty much twice as much volume for the same weight of
cell can. As in 4680 cells need half as much casing saving half the previous can weight
from the 2170 in the 4680.
And that is basically why they have chosen 4680 cells. It ends up improving range by
7%, whilst improving cost by 18%. This was the sweet spot when it came to form factor
size.
Now I don't know the thickness of the actual can, so I can't work out the exact figure
of weight saving, but it's certainly enough to illustrate my point.
Whereas a lot of people condition the 4680
to mean Tesla's 4680 cells and include the chemistry, along with the manufacturing process
like dry battery electrode. Most of Tesla's amazing engineering has gone into what's inside
the cell and how it is made. Although there was obviously a lot of R & D involved in first
establishing the size of the cell. Therefore anyone is free to manufacturer a cell with
form factor size of 4680, and they also know the benefits.
There was one element of Tesla's 4680 I missed out, now I am pretty sure that Panasonic can't
get around this element. These cells will have to be tabless still, otherwise the batteries
would suffer from thermal runaway. Other than that, I think Panasonic are going to be manufacturing
them in the exact same way they are in Giga Nevada.
How do I know all this? Well did you hear
what the CEO said "shipped samples of its more powerful 4680 format electric car battery",
more powerful. As in Panasonic now has cells that have better energy density that 2170
cells. Panasonic's will have better energy density than Tesla's 4680 cells now, as Panasonic
are going to continue using 2170 chemistry, which includes cobalt. And not only that,
they cost less to build. But if they are increasing range by 7% then that's a Model Y Long Range
from 330 miles to 353 miles of range. Resulting in a cost saving of around 2 to 2 and a half
thousand dollars, per battery pack. So no wonder Panasonic are jumping all over
this, it's a better more profitable mouse trap for them. On top of that, they have a
customer who says we'll buy everyone you can make.
Are Tesla helping Panasonic with this, I would
say it likely, they would help where essential, and feasible. But they are not going to help
Panasonic set up a dry battery electrode processing facility, as that would be at the opportunity
cost of Tesla setting up another one in-house. I think that is the real bottleneck with the
4680 manufacturing, and the biggest barrier to entry.
How do I know? Because they are spending $700 million on a facility with a 10 GWh capacity.
The dry battery electrode process would have meant a smaller, lower cost facility than
this one planned.
The CEO also went on to also confirmed the
rumors that it plans to eventually have 4680 production capacity in North America. Well
of course they do, as that is where their customer is. Panasonic already have a reasonably
large cell fab in Nevada. So my thoughts are, possibly Panasonic will start 4680 lines in
Giga Nevada. And as they ramp those up, they will close down 2170 lines. The 2170 has become
antiquated, there is a lower cost, more efficient cell now. So wouldn't it make sense for Panasonic
update their cells.
I would say that Tesla could make a 4680 battery pack that could replace the current 2170 pack,
with minimal hassle, and it should work in there fine. Except it won't be a structural
battery pack. I don't think Tesla can move Fremont over to structural packs for sometime,
especially judging how badly the X and S refresh went. Tesla doesn't want to risk large production
down times. Now this assumes that 4680s can be placed
in a normal battery pack, and still fit in the car, remember they are 10 mm taller than
2170 too.
But Tesla aren't going to be getting these cells for a couple more years or so, things
might be different then. These cells may very well be earmarked for structural packs, whether
retrofitting Fremont or for a new factory.
Wow this cell design is great, it's what was
required for the EV industry, this would be a massive saving to all the EV OEMs, not to
mention that additional range they so very desperately need. Except, I think all the
OEMs have already locked in their future for cells. They locked in what they knew, and
could guarantee they could get to work, as basic as it was.
Panasonic say they are open to finding additional customers, but who is that going to be? Maybe
some new start up. DeLorean should buy Panasonic's 4680 cells perhaps. I am really hoping they
make their car nice.
Why isn't Tesla just doing this in-house,
why are they still using 3rd party battery manufacturers. By 2024 Tesla should have supply
of over 300 GWh of cells a year, what difference will the extra Panasonic ones make? Well Tesla
seems to really want every cell they can get their hands on, and will just make it work.
Elon has said this, but it would also appear all actions support this, particularly with
the new BYD partnership.
I am not sure how big Panasonic intend on
going here, but if it's anything like legacy autos, we might expect 100 GWh or so. I think
if Panasonic want to grow a profitable EV cell business, then they are doing the right
thing. It will still take a couple of years to get up and running, as these things really
do take time. I think these new cells are here to replace
the 2170 cells, and current vehicles. That's still enough cells for about another 1.5 million
vehicles though. Approximately a further $15 billion a year profit, or $1/2 trillion valuation
with a p/e around 33. Just from these cells. And this is still going to be a few years
away. So we don't really know what they are for, it could very well be a new factory by
then. Maybe even one in Japan.