Battery Manufacturers Jump on the 4680 Cell Bandwagon, Will Tesla Exit the Market?

Korean battery manufacturers jump on the 4680 cell bandwagon 7 photos
Photo: Yonhap News
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Tesla has been rumored to give up 4680 cell production and rely on third-party suppliers if it can't produce the bigger cells cost-effectively. A new report from Korea indicates that local battery manufacturers are ready to mass produce cylindrical cells with 46 mm diameter, apparently confirming previous rumors.
During 2021 Battery Day, Tesla announced a new battery cell format that would bring important benefits in terms of costs and performance. Tesla promised that a new manufacturing technique called dry electrode battery (DBE) would provide important cost benefits. More than that, a new silicone anode should've massively improved battery performance. However, the 4680 cells proved difficult to manufacture and inferior to their 2170 counterparts.

The current 4680 cells produced by Tesla are still made using a similar chemistry as the 2170 NMC cells. The silicone anode promises didn't pan out, something one could also say about the DBE manufacturing process. This means that Tesla failed to achieve the announced advancements. Even worse, because the new cells are larger, keeping them cool inside the battery pack is more difficult, explaining why the Cybertruck has poor charging performance.

So far, Tesla's 4680 cells are not only inferior to 2170 cells in terms of energy density and charging performance, but they are also more expensive. This contributed to Tesla's disappointing financial report at the end of the first quarter. In the layoff spree started by Elon Musk, it has been rumored that Tesla is considering stopping 4680 cell production at Giga Texas and switching to external suppliers. Last month, a report from China indicated that this would happen if the reorganization didn't yield the desired cost savings by the end of the year.

Tesla eventually started hiring again, naming Bonne Eggleston as the new head of the 4680 battery program. Tesla wants to beat supplier costs by the end of the year, although Elon Musk admitted that it is now more cost-effective for Tesla to buy cells from external suppliers than using its own. According to a new report, Korean battery manufacturers are preparing to start mass production of 4680 cells as early as this August. If that's the case, Tesla's bet on internal 4680 cell production seems lost.

LG Energy Solution is the first battery manufacturer, besides Tesla, to have the 4680 cell production set up. The initial production at its Ochang plant in Korea will be relatively small, at 9 GWh per year, which is enough for more than 100,000 electric vehicles. However, LGES is building a new factory in Arizona with a capacity of 36 GWh and plans to start production in 2026. The Korean manufacturer counts on Tesla's low yields, which industry insiders estimated at 20%, to ensure its cells become the preferred choice for Tesla EVs.

While LGES specifically targets Tesla as a 4680 cell supplier, Samsung SDI is thinking more broadly. Samsung plans to produce different sizes of 46-mm cylindrical batteries by the end of the year. The company is reportedly in talks with BMW and Rivian to supply them with 4695 cells, while the former also wants to use larger 46120 cells. SK On, another major battery manufacturer known mainly for its pouch-type battery cells, is also interested in producing cylindrical cells.
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About the author: Cristian Agatie
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After his childhood dream of becoming a "tractor operator" didn't pan out, Cristian turned to journalism, first in print and later moving to online media. His top interests are electric vehicles and new energy solutions.
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