Tesla CEO Elon Musk, to achieve sales of 20 million cars in 2030, or even launch a $25,000 affordable car, a key is to achieve groundbreaking battery technology that reduces battery costs. To this end, Tesla introduced the 4680 battery, which uses a larger cell and new dry electrode coating technology. If all the potential efficiencies of the new cells are realized, the cost to manufacture Model Y’s 4680 battery pack would drop by $5,000 to $5,500.
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Musk told shareholders in August that Tesla expects to have mass production of the 4680 battery by the end of the year. But Stan Whittingham, co-inventor of the lithium-ion battery and 2019 Nobel laureate, believes Musk is too optimistic about the timeframe for commercialization of the new technology.
Experts say Tesla can currently only cut Model Y battery costs by $2,000 to $3,000 (about $14,000 to $20,000), about half what Tesla expected when it launched the 4680 battery two years ago. Also, the cost reduction comes mainly from the new cell design, which is larger than Tesla’s existing 2170 cells. The key to Tesla’s cost reduction is dry electrode coating technology, which Musk calls a revolutionary technology but cannot be mass-produced.
Tesla can make small batches on the dry electrode coating technology, but when they start mass production, there are too many defectives, people familiar with the matter said. Production yields are so low that all the expected savings from the new process are wiped out. “They are not ready for mass production,” said one expert.
