I think we had too much hope for the 4680 batteries.
The dream battery that was going to save the world, yes, the transition to a global electric
fleet.
In reality that was the biggest take away from the entire presentation that was Battery
Day.
The fact that batteries could now be produced in 1/10 the footprint.
Of course there were other major advances in improving efficiencies whilst also reducing
costs, thus making the electric vehicle more affordable, but it was moot if not scalable.
But the dry battery electrode process, this
was the reason Tesla acquired Maxwell Technologies.
This changed everything, before that, with the old wet slurry technique, aside from it
not being particularly great for the environment, well it just wasnt going to be practical.
To give you an idea, the most state of the art battery factory, with the previous processes,
would have been Giga Nevada.
I am pretty sure that 2170 batteries are still the most energy dense out of all the other
batteries used in vehicles.
Now Giga Nevada was only ever 1/3 complete,
if it was fully complete, it would have become the largest building in the world by footprint.
And Tesla think they could have eventually got 150 GWh from that factory.
The same Tesla that is aiming for 3 TWh of battery production before 2030.
Which would have required 20, of the worlds largest buildings.
But due to the 4680 manufacturing processes, now Tesla can make that many batteries in
just 2 of these buildings instead.
Of course they don't need to be anywhere that big now, and are far more compact, due to
so many processes being removed.
And instead they can be built locally next to the car factory.
Hence why this new 4680 battery was such a
big deal.
Tesla had just shown us that not only an electric car could be affordable, we were also just
told it was scalable.
Scalable enough to eventually replace the entire global fleet of ICE cars.
We were just told we could have an electric future.
Vehicles free of burning fossil fuels.
No more dependence on oil, centralized power, extractive oil economies, dictators controlling
black gold.
We had just been given a glimpse into the potential clean air future of our planet.
I was prepared for anything at Battery Day,
I had put my mind in prepare to be blown away mode.
It was an uncanny feeling.
I knew we were on the precipice of something huge, something world changing.
But this was not a presentation for shareholders.
This was not meant to be a sneak peak into the future of the company, and the potential
valuation.
No this was just a recruitment day.
I say that batteries are the major constraint of Tesla, but it's not the actual bottleneck,
when you dive deeper.
If batteries are the constraint, then hey, I have a really genius idea, then build more
batteries.
Right sure, but I think it is difficult for people to get their heads around just the
sheer quantity of batteries that are required.
It is literally unfathomable.
It's too big to comprehend.
When you start to realize that, then you start to get some idea of how many batteries we
need.
So saying, just make more batteries, well, guess what, perhaps Tesla are doing everything
they can possible to make more batteries.
This new process had just reduced the size of the factory required by an enormous amount.
In addition to that when you see the chemistry improvements Tesla were making, well the people
who did understand what Tesla had achieved, well they were very excited indeed.
The people this presentation was targeted at, the engineers that want to work on the
best technologies.
Hence Tesla explaining the advances in technology, rather than giving you the shareholder answers,
of we are going to make a lot more cars, for a lot less money, and the profits will be
as unfathomable as the number of batteries we will make.
The bottleneck to make more batteries, are these engineers.
Tesla wants to hire all the engineers they can, in order to make as many batteries as
physically possible.
That's why Tesla does these presentations, same for AI Day, most investors really don't
seem to understand what Tesla is really telling you.
But the hardcore battery and AI nerds, they do, however, they probably can't read a financial
sheet so well, and may not understand the economic impact of such a battery, they just
love the science.
It is when you combine the two, you realize just what this could potentially mean for
the financials of the company.
Of course it went right over Wall Streets head.
I mean they still have auto analysts analyzing this company, this required a battery technician
or engineer to explain the true impact.
How can someone who understands ICE engines have any grasp of this.
The main thing Wall Street wanted to hear was a million mile battery, which was not
literally mentioned, so the stock actually went down.
Now one and half years later, we look like we are finally nearing the launch of this
coveted battery.
The tab-less design was also important, along
with cylindrical form factor.
The tab less design was required for the thermal management as otherwise the 4680 batteries
were too big for the atoms to pass through and would have created too much heat, the
tab less design resolved this.
But not only that, being tab less meant that there would be a significantly faster production
time, as it would be seamless, rather than having to stop and start continually.
We needed low cost batteries, and to be made in factories that wouldn't take decades to
be built, but also needed the production line to run as fast as possible, to make enough
in a reasonable time.
Cylindrical and tab less design greatly improved production speeds.
Therefore as for these new vehicles coming
out Texas, that we hoped would be 4680, well it isn't looking likely.
The EPA efficiencies are simply too low, it doesn't add up.
Even if the 4680 may take years to develop to the levels we were told on Battery Day,
there are still some instant improvements that would be felt.
The structural battery pack to improve range by 14%, and the actual 4680 cell design, using
a lower surface area to volume ratio, thus reducing the amount of steel required for
the casing, compared to smaller batteries, and this was manged with tabless batteries
for thermal management.
It was pure genius and resulted in a further 16% range increase.
So even if the chemistry in 4680s now were just at the same stage as 2170, then we would
have still felt physics from these other changes, due to the weight savings of this techniques.
Therefore we can hopefully rule out 4680 batteries, I say hopefully, as if it was 4680 it would
mean the energy density is worse than 2170, not the direction we want to go.
I think I am sad to say, that the 4680 production
has perhaps not gone as well as we hoped.
Only one million cells produced by January, and supposedly perhaps another million cells
in March, we are only talking enough batteries for a few thousand vehicles.
If Texas is about to open, then there simply aren't enough batteries available for any
serious production.
4680 was a massive break through, but just because it was possible, didn't mean it was
easy.
It has obviously been a very trying task.
Even harder than Elon thought.
He said it's hard to judge when dealing with exponentials.
Elon said 100 GWh of 4680 batteries this year, but we are barely at 100 MWh.
This is a huge discrepancy.
Obviously this process is a lot harder than we thought.
Which instantly probably means, that this process is going to proprietary to Tesla for
a very long time.
But Tesla have achieved it, they have produced a million of these cells, which was possibly
a major break through for them.
Remember the Kato Rd facility, or pilot test
line for 4680, is a lot smaller than Texas.
We are comparing a 10 GWh/yr facility with potentially a 250 GWh a year facility.
Therefore Kato Rd's objective, isn't necessarily to produce as many batteries as possible,
it should be more inline with doing whatever it takes to get the Texas facility running
as fast as possible.
It's a test site to get Texas producing batteries at as high a yield as possible as fast as
possible.
Oh right the yields, now we were seeing some really high yields come out of the test site.
So is this all moot, does it matter that the
4680 batteries aren't at a decent production capacity at Kato Rd yet?
It's relatively small in the scheme of things.
It is all about this big 4680 factory in Texas.
Now I understand a lot of you don't seem to
care that much about the 4680 battery production, but Tesla have bet the future of this company
on the ability to ramp up battery production, which comes from 4680 manufacturing process.
Yes, we have LFP as a back up too, and that will likely be enough to create enough batteries
for Tesla to still be a highly profitable car company.
But LFP has the same issues with the battery manufacturing process as 2170.
It isn't going to be feasible to replace the global fleet.
Right now we are at the precipice of Tesla's success.
Can they or can't they achieve these Battery Day techniques?
It still has yet to be seen.
But Tesla are acting as if they can, they are doubling down on their 4680 production
lines, the one in Texas is huge, and seems to be doing stuff.
It looks like Tesla do believe the 4680 is possible.
But in my opinion what this battery production line, almost decides the fate as to the electric
future.
From there we hope that we can adopt these manufacuring techniques, and replicate them
into an LFP battery, for the battery that will make everything that much more affordable,
and abundant.
There is a lot riding on this, perhaps why I am covering it in such detail.
This is why I was saying all last year, it's all about keeping an eye on what's happening
with the 4680 battery, as it is the biggest determinant as the future of this company.
And we are about to get the most information about them we have ever had since Battery
Day.