Even the largest tech giants can slip up sometimes. After spending a decade trying to produce a car, Apple abandoned the project, drawing global sighs. Similarly, Tesla, the world’s most valuable carmaker, has been facing challenges with a monumental project: the 4680 cylindrical battery.
Since its inception in 2019, Tesla has invested USD 3 billion in the project over five years, marking it as a rare substantial investment within the company. Yet, the battery has not reached mass production. As the most critical component of electric vehicles, Tesla hoped the development and application of the 4680 battery would set it apart in the industry. Clearly, this ambition has not been realized.
In Elon Musk’s sweeping layoff plans, the 4680 battery project became a major casualty, with its headcount reduced from 1,600 to just 1,000. There were even rumors of Tesla abandoning the technology, signaling impending doom.
However, unlike Apple’s car project, Tesla’s 4680 large cylindrical battery has found a turning point. Several engineers close to Tesla told 36Kr that the latest task for Tesla’s battery team is to mass produce the 4680 battery by the end of the year. “There are already cells being installed in cars for testing, with mass production starting in the US and European factories to follow.”
Battery costs have become the primary obstacle to profitability for electric car manufacturers. Tesla’s 4680 battery is viewed as a game changer, potentially allowing carmakers more control over their production. And following Tesla’s lead, other battery manufacturers are strategically positioning themselves. At one point, Nio aimed for a production capacity of 40 gigawatt-hours.
However, many companies have since scaled back their efforts. For one, the ongoing price war in the car market has dampened enthusiasm for investing in new technology. Amid this challenging environment, Tesla’s quiet breakthrough stands out as a beacon of hope.
Tesla’s dry electrode processing technology can be used not only in the 4680 but also as the ultimate production method for future solid-state batteries. This technology can shorten the entire production line by about 100 meters, nearly the length of a football field.
According to Tesla, using this method can reduce costs by over 18% and equipment investment by 41% compared to the wet process. Industry insiders told 36Kr that making both the anode and cathode with the dry processing method can save USD 0.2–0.3 per watt-hour of battery cell cost.
What does this mean? The lowest current price for a lithium iron phosphate (LFP) battery cell is RMB 0.32 (USD 0.044) per watt-hour, with bill of materials (BOM) costs and manufacturing, including labor, totaling RMB 0.28–0.3 (USD 0.039–0.041). The savings from Tesla’s method represent most of the profit margin for second-tier battery manufacturers.
China has the world’s most comprehensive and advanced power battery supply chain. However, Chinese battery companies are currently overwhelmed by cost reduction pressures, failing to notice Tesla’s lead in the large cylindrical battery field.
This lead may take years to bridge.
Tesla’s silver bullet: Dry electrodes
In 2019, Tesla announced the acquisition of US startup Maxwell Technologies for USD 218 million, a 55% premium. Maxwell held a core patent technology: dry electrodes.
Musk saw the enormous potential of this technology and applied it to the manufacturing of the 4680 battery electrodes.
The traditional wet process involves mixing powder materials for the anode and cathode with toxic solvents to create a slurry, which is then coated onto a foil and baked in a 100-meter oven to remove moisture, forming the electrode sheet. Tesla’s dry process, however, mixes the anode and cathode powders with a special binder and directly compresses them onto the foil, eliminating moisture and the need for baking.
The first critical step in making dry electrodes is to mix the powder materials uniformly, a challenging task.
An engineer close to Tesla told 36Kr that, if you make a bucket of powder, the results from the first and last scoops can be completely different. The measurements also vary significantly if the powder sits for two hours versus eight hours. If the mixture is uneven, the resulting electrode sheets are nearly unusable.
The more challenging step is the rolling process. Traditional processes utilize rollers to compress the dried electrode sheets, ensuring the battery cell’s performance. Tesla has chosen to use graphite material for the anode, which is softer and easier to compress, quickly achieving mass production. But the cathode uses hard metals like nickel and cobalt, akin to compressing fine gravel into a smooth mirror, posing significant challenges. The dry cathode process remains the biggest hurdle for mass producing the 4680 battery.
An engineer said that the cathode rolling process, if not done carefully, can damage equipment. “Each repair takes 45 days, indefinitely delaying mass production.”
Musk initially set the goal for mass production of the 4680 battery by 2021, with a capacity target of 100 GWh by 2022, which was overly optimistic. Fortunately, through the engineers’ efforts, the dry cathode technology breakthrough was achieved by the end of 2022.
By the end of 2022, Tesla appeared to have successfully manufactured large quantities of dry cathode sheets. However, it encountered issues during the process of winding these sheets into battery cells, specifically that the high speed of winding caused the sheets to break. The company ended up spending the bulk of 2023 focused on resolving issues in electrode sheet manufacturing—a process 36Kr was told had been an “almost impossible problem to solve.”
In April this year, Drew Baglino, senior vice president at Tesla, announced his resignation. Baglino was a key figure in the 4680 project, and after his departure, the dry process route underwent adjustments.
“We are still using the roll made by the end of 2022 and optimizing the winding process to solve problems more easily,” an engineer explained, who added that one of the issues Tesla previously faced was different electrode thicknesses causing the foil and electrode to be misaligned when wound, “like trying to roll four sheets of paper of different thicknesses together.” This is not a complex process, as existing wet methods face similar issues, with solutions from suppliers at higher costs.
The shift in technical routes is key to Tesla’s confidence in achieving full dry-process mass production of the 4680 battery by the end of the year, with cells reportedly already being installed in cars for quality testing.
RELATED ARTICLE
Are dry electrodes the best fit for large cylindrical batteries?
Even an innovative company like Tesla has found it challenging to master dry electrode processes, particularly when using graphite for the anode. Chinese, Japanese, and South Korean power battery companies have adopted a more circuitous strategy, using mature wet methods combined with silicon-carbon anodes for mass production.
Both routes have their pros and cons. In theory, Tesla’s dry electrode processing technology, by eliminating the baking phase, offers cost advantages but limited energy density improvements using only graphite for the anode.
The mature wet method, while maintaining manufacturing costs, provides higher energy density and better performance. The downside is the unresolved swelling issue of silicon anodes. Currently, many domestic battery manufacturers are stuck at this stage.
Of course, adjustments in manufacturing processes bring more uncertainties.
Compared to traditional cylindrical battery production lines, processes for large cylindrical batteries require higher coating precision. “Previously, the coating was a single tab, covering one side and aligning both edges. Large cylindrical batteries have full tabs with many edges that need alignment during coating,” an engineer told 36Kr.
This puts immense pressure on equipment, as the 4680 battery requires a coating precision with 0.1 millimeters or less of deviation, while most equipment in China can only achieve precision of around 0.5 mm.
This issue is not insurmountable. “Japanese coating equipment guarantees 0.1 mm deviation in contracts but costs 3–4 times more than Chinese equipment,” the engineer said.
This is just one problem with coating, as full tabs face numerous issues. Whether using flattening or cutting processes during tab formation, tiny fragments or burrs can be generated, posing thermal runaway risks if they enter the battery cell.
Battery manufacturing follows the “barrel principle,” that is, the lowest capacity cell in a group of cells determines the capacity of the whole group of batteries. Each issue must be properly addressed for large cylindrical batteries to achieve smooth mass production.
Due to ongoing price wars, mass production of large cylindrical batteries has been repeatedly delayed. Meanwhile, higher energy density semi-solid state batteries are moving towards mass production, capturing carmaker orders.
The pursuit of higher energy density in EVs has always existed. Nio’s 150 Wh/kg semi-solid battery pack has already been tested live, with a range exceeding 1,000 kilometers. This year, IM Motors released the “Lightyear” semi-solid battery series, promising deliveries within the year.
According to the China Automotive Battery Innovation Alliance, semi-solid batteries with a capacity of 2154.7 MWh were installed in the first half of this year. This capacity is sufficient to equip over 14,000 Nio ET7 vehicles.
Benefiting from high energy density, semi-solid batteries are quickly advancing toward mass production. Large cylindrical batteries are also progressing toward fast-charging capabilities, with companies like Eve Energy, CALB, and Zenergy introducing 4–6C large cylindrical products.
While both semi-solid and large cylindrical batteries are nearing mass production, industry opinions on each technology vary.
One perspective suggests that once semi-solid batteries achieve mass production, large cylindrical batteries will be obsolete. With superior energy density and promising future development (solid-state), semi-solid batteries are seen as having a near-absolute advantage, with cost being the only significant drawback.
On the other hand, some believe large cylindrical batteries offer more benefits. From a safety standpoint, large cylindrical batteries use steel casings, whereas semi-solid batteries use soft packs. There is uncertainty whether high-nickel ternary batteries in soft packs can meet new national standards for “no fire, no explosion” thermal runaway tests.
Despite the differing opinions, both technologies have faced delays in mass production due to ongoing cost-cutting battles in the automotive industry.
Tesla needs to go all-in
In the battery industry, practicality has become paramount, with breakthroughs in new technology often overshadowed by the allure of lower prices for mature technology. This trend has been particularly challenging for large cylindrical batteries. Car and battery companies, once enthusiastic about the technology, have largely quieted down—except for Tesla.
“Tesla will mass produce fully dry-process large cylindrical batteries in the US by the end of the year, with European factories to follow,” a source told 36Kr.
Tesla has always been a trailblazer in new technologies, setting precedents for other carmakers to follow, whether through integrated die casting or deploying large models. This cycle may repeat if Tesla successfully mass produces and adopts large cylindrical batteries by year-end.
Large-scale cost reductions in manufacturing are achieved through process improvements. Tesla’s dry electrode technology and the production speed of large cylindrical batteries are crucial. The production speed of cylindrical batteries has now reached 300 PPM (producing 300 cells per minute). If large cylindrical batteries achieve this speed, their production efficiency could be 4–5 times that of prismatic batteries.
Coupled with the reduction in equipment and material costs brought by the dry process, large cylindrical batteries may face short-term challenges with yield and efficiency, but the long-term cost reductions are significant. For carmakers, large cylindrical batteries unify battery specifications, lower prices, and strengthen control over battery suppliers.
However, the pack design of large cylindrical batteries presents a challenge. “Few Chinese carmakers have this technical capability,” a battery industry engineer told 36Kr.
“The difficulty of pack design for large cylindrical batteries lies in the numerous weld points, but it’s not an insurmountable problem, just requiring investment,” the engineer said. “However, carmakers currently lack funds.”
The battery industry is closely watching this technology, especially CATL. As the global battery leader, CATL’s production lines are almost entirely for prismatic batteries. If large cylindrical batteries are widely adopted, CATL would need to change its production strategy at high costs.
A person close to CATL told 36Kr that, while CATL doesn’t publicly support large cylindrical batteries, it has invested heavily in them privately. Internally, CATL operates a large cylindrical battery production line with an efficiency of about 150 PPM, with investment costs already in the billions of RMB.
Tesla values the production efficiency of cylindrical batteries. The winding form of cylindrical cells theoretically resembles the production of toilet paper rolls. Currently, CATL’s winding speed is 100 meters per minute, a top level in the battery industry, while the winding speed of paper rolls easily reaches 1,000 meters per minute. Battery production processes still have vast room for improvement, which is one reason Musk is steadfastly developing the 4680 battery. He aims to revolutionize battery manufacturing, just as he changed car manufacturing.
According to Musk’s initial expectations, the 4680 battery could reduce battery manufacturing costs by about 20%, equipment investment costs by 35%, and factory floor space by 70%.
The large cylindrical battery forms the foundation for Tesla’s next round of large-scale expansion, producing affordable cars with cheaper batteries and generating more profits to reinvest in research and capacity expansion. This breakthrough could propel Musk’s grand vision: accelerating the advent of the EV era and the world’s transition to sustainable energy.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Han Yongchang for 36Kr.