Tesla’s 4680 batteries have been a topic of interest since before they were announced, with many speculations surrounding their development and ramp-up. In a recent shareholder conference call and shareholder letter, Tesla provided an update on the status of these batteries. The shareholder letter mentioned that the 4680 ramp continued successfully in Q1 and stayed ahead of the Cybertruck ramp, with costs decreasing as production rate and yield improved.
During the conference call, Tesla executives clarified that they were not producing more 4680 batteries at the moment because it was not necessary until Cybertruck production ramped up and more batteries were needed. They also discussed how major automakers placing large battery orders in the past had driven up prices and limited availability, prompting Tesla to develop its own battery methods to reduce costs. Now, with the battery market in a different state, there is less of a need for in-house battery production.
Tesla also mentioned using the 4680 battery development to lower supplier costs and implementing these savings into its supply chain while procuring the end product from external battery makers. This strategy allows Tesla to benefit from lower battery costs compared to competitors. The discussion also touched upon the Inflation Reduction Act of 2022 and its impact on battery production, encouraging domestic battery production in the USA, but with uncertainty about its longevity.
The 4680 battery project appears to be progressing well, although it may not have achieved the groundbreaking advancements in battery production and costs initially anticipated at Battery Day. Despite this, any cost reductions and risk mitigation achieved through the project are seen as beneficial. Tesla’s 4680 battery production capability is also seen as a hedge against potential anti-Chinese EV policies that may arise in the future.
Overall, Tesla’s approach to 4680 battery production seems to be strategic and aligned with the company’s goals of reducing costs and securing a stable supply chain. While the project may not have met all the initial expectations, it is still making progress and contributing to Tesla’s overall competitiveness in the electric vehicle market. As the global EV market continues to evolve, innovations in battery technology will play a crucial role in driving the transition towards sustainable transportation.
