To The Moon

‌$特斯拉(TSLA)$  ‌$ Tesla (TSLA)$ is currently at a very critical juncture as the company's CEO Elon Musk seeks to crack the code for making higher performance but lower cost batteries. Elon Musk is looking to crack the code for making higher-performing but lower-cost batteries.

According to people familiar with the company's plans, Tesla is looking for material suppliers from China and South Korea to help it lower the cost and increase the energy density of its latest cells. And that comes as the company has been grappling with battery-related performance and production issues that have caused Tesla to delay the rollout of its Cybertruck trucks.

As Tesla ramps up production of 4,680 cells in the U.S., the company has partnered with China's Ningbo Rongbai New Energy Technology Co. and Suzhou Dongshan Precision Manufacturing Co. to help it cut material costs, people familiar with the matter said.

If Tesla can solve performance and process issues and meet its higher production targets, the 4680 cells could eventually become the key to Musk's dream of building 20 million cars a year by 2030.

Neither Tesla Inc. nor Musk himself has responded to requests for comment at this time.

Tesla has also signed a deal with South Korea's L&F to provide a high nickel cathode to increase the energy density of its 4680 cells, one of the people familiar with the matter said.

The Austin, Texas-based electric car maker aims to increase its own production with 4680 cells made by South Korea's LG New Energy and Japan's Panasonic as an insurance policy to ensure its future electric vehicle production, two of the sources said. LG and Panasonic are expected to supply the batteries for Cybertruck, one of the sources said.

Musk told investors earlier this year in March that a shortage of battery supply meant "factory production will come to a halt.

The new 4680 battery is expected to play a key role in the futuristic Cybertruck, which will be the company's first new model in more than three years, to be launched at the end of this year.

Tesla had previously considered three battery options to ensure the launch would not be delayed further: the smaller 2170 battery widely used in other Tesla models, the 4680 battery and the less expensive lithium iron phosphate battery, but the electric car maker ultimately preferred to wait until the 4680 battery was ready, people familiar with the matter said.

In 2022 Musk said he did not expect the 4680 battery to be a "limiting factor for the Cybertruck or any other model.

Tesla's self-designed 4680 battery, named for its external dimensions (46 millimeters in diameter and 80 millimeters in length), is critical to Tesla's future production plans. Tesla intends to produce the battery at plants in Texas, California, Nevada and Berlin for use in models ranging from the Mode Y to the Cybertruck, the sources said.

The "underrated" Tesla?

But Musk admitted at Tesla's investor day on March 1 that the company has not yet achieved the first wave of mass production of the new batteries.

Despite the problems it is currently facing, some analysts remain optimistic and believe Tesla is capable of solving these problems.

Morgan Stanley said after the investor day, "While execution risks remain and many details are still unclear, Tesla's impact on the global battery industry may still be underestimated."

Musk first unveiled this new battery at a Battery Day event in September 2020. At that event, he promised to reduce battery costs by 50 percent through a series of innovations, from larger cell sizes to a new "dry" electrode coating process that could significantly reduce the size and cost of battery factories while improving battery performance.

However, Tesla has delayed the process of moving the new battery from the initial prototype stage to full production, leading to the long-awaited launch of the Cybertruck, which hopes to take advantage of the 4680 battery's improvements in energy density and power, but these advances have yet to materialize.

But suppliers need time to increase production. Panasonic is currently running a pilot 4680 line at its Wakayama, Japan, plant and plans to begin mass production later next year.

Shoichiro Watanabe, Panasonic Energy's chief technology officer, said last month that the company's new battery plant in Kansas will initially focus on production of 2170 cells, but that the company will eventually move production of 4680 cells to North America. Last year, LG also said the company plans to open a new 4680 line at its Ochang plant in South Korea in the second half of 2023.

The first generation of 4680 batteries made by Tesla at its Fremont, California, plant failed to meet the energy density targets it set, the people said.

So far, the electric car maker has been able to dry-coat the anode, or negative electrode, but still has problems with dry-coating the cathode, where the company is expected to achieve the most significant results, the people said.

Musk and company executives have said that Tesla has not made a major breakthrough so far in its attempts to increase the output of the dry coating process, which is currently only enough to produce batteries for about 50,000 cars a year.

Musk has said in 2020 that Tesla will build enough capacity internally at 4,680 to supply the demand for 1.3 million Model Ys per year.

While the company's executives say it seems likely that Tesla will be able to increase production of 4680 by five times by the end of the year, the company is hedging its bets. Musk is betting that if Tesla can finally achieve mass production of the batteries this year, that would be a good thing, and the company could use those batteries in the energy storage systems it sells to utilities and consumers.

Tesla has also been installing first-generation 4680 cells with wet-coating processes for the cathodes in so-called structural battery packs in the Model Y produced in Texas. And most of this vehicle uses the older 2170 battery.

Two people familiar with the matter said Tesla plans to use cathodes with more than 90 percent nickel content in the next generation of 4680 cells. Another source said L&F is expected to be one of the suppliers of such high nickel cathodes