As expected, Tesla's 4680 battery cell ramp has been slow. The company aims to produce the cells in high volume at Giga Texas, eventually. However, for now, it has been making them at a pilot plant on Kato Road, near the company's original factory in Fremont, California. This may be cause for concern for people hoping to take delivery of a Tesla Cybertruck in 2023.
We learned recently that Tesla is in the process of building out and testing battery production equipment on the second floor of the Fremont factory. The new battery line will reportedly use cells produced at the Kato Rd. facility to build Tesla Cybertruck battery packs.
Several reports over time have pointed to Tesla's inability to produce the 4680 cells on a large enough scale to see substantial savings. However, when Tesla first unveiled the new technology at its Battery Day event in 2020, it was clear that the cells wouldn't arrive right away, and that their impact on Tesla's future production and bottom line was likely somewhat far off.
Tesla has been known to do many things over the years that caused it to lose money, at least initially. The company tends to invest heavily at first, lose money and deal with criticism, after which it eventually works the kinks out and then benefits significantly. The expectation that a brand-new proprietary battery cell could be produced, ramped up quickly, and generate larger profits for Tesla right away is far-fetched, though CEO Elon Musk has always remained overly optimistic.
At any rate, since Tesla can't yet significantly speed up the new battery manufacturing process, it has been producing the cells on the Kato Rd. pilot line and stockpiling them for future use. It also seems the automaker hasn't been using the batteries on a large number of Model Y SUVs yet, which may be so that it can save them for the Cybertruck. However, we have no way of knowing Tesla's strategies for sure.
What we do know is that the Cybertruck is coming toward the middle of next year. This has been reiterated on many occasions, including during Tesla's Q3 2022 earnings call. Moreover, Tesla's shareholder's deck noted that tooling is already underway for future Cybertruck production.
This all begs the question, if the Cybertruck is coming soon and there are potentially a million or more pre-orders, how will the slow 4680 battery cell ramp play into the equation?
Interestingly, we learned during the earnings call that the company's 4680 cell production tripled in Q3 2022. Tesla is aiming to use some of the cells in vehicles going forward. Musk noted that the automaker is “finally gaining rapid traction on the 4680 cell.” Musk added that the process is progressing well at both the Kato Road location and at Giga Texas, where Tesla recently installed second-gen 460-cell manufacturing equipment. He shared via Teslarati:
“ output is growing rapidly, and we expect it to start incorporating in cars and having it be a significant portion of our production here in Texas in the coming months."
Tesla's Zackary Kirkhorn said that the company is currently looking at the ability to be able to produce enough 4680 cells for about 1,000 cars per week in Q4 2022.
With all of that said, Musk also noted on the call that Tesla doesn't anticipate the 4680 cell ramp having any impact on Cybertruck production or the production of any of its other models. He didn't explain exactly how or why this is the case, so we can only speculate at this point.
Tesla recently noted that it had enough battery cell production to satisfy all EV production through 2022, though that was likely referring primarily to the 2170 cells. Perhaps Tesla could initially produce some 2170-cell Cybertrucks. Could there be different varieties of the electric pickup truck with different specs and range, some with the 4680s and some with the 2170s?
Another thought is that Tesla could be counting on various suppliers to come through with their 4680 cells by the time the Cybertruck is ready to come to market. What do you think will happen? Are you confident about Tesla's ability to make all of this add up, or do you have concerns?