A Reuters report published yesterday suggested that Tesla is struggling with the ramp-up of its new 4680 battery cell. The report suggests that the dry-coating technique used to produce bigger cells in Tesla's 4680 battery is “…so new and unproven the company is having trouble scaling up manufacturing to the point where the big cost savings kick in”.

The report was notably light on detail, while its sources were 12 anonymous experts “…close to Tesla or familiar with its new technology”. The sources reportedly predict that Tesla will find it difficult to fully implement its new dry-coating manufacturing process before the end of this year, and perhaps not until 2023. In August, Elon Musk told shareholders Tesla would be producing high volumes of 4680 batteries by the end of 2022.

The automaker acquired its dry-coating technology via its acquisition of Maxwell Technologies in 2019. It is hoped that the technology will dramatically cut battery costs through the elimination of parts of the manufacturing process. The anonymous experts quoted in the Reuters report believe Tesla could save up to US$5,500 per Model Y battery pack.

The 4680 is Tesla’s fourth type of battery cell and will be used initially in Model Ys. The company also utilises 18650 cells (NCA cells produced by Panasonic and used in Model S and Model X); 2170 cells (NCA/NCM cells produced by LG Energy Solution and used in Model 3 and Model Y) and LFP prismatic cells (produced by CATL and used in Model 3 and Model Y).

The 4680 is also NCM and built by Tesla itself in Texas (note that earlier this year Panasonic announced plans to produce 4680 cells in Japan and the USA). Compared to other battery variants, it is larger in size and weight but with a greater capacity and longer life.

The short-term implications of Tesla ramp-up issues, if accurate, may be a high number of rejects while fine-tuning takes place, lower-than-expected cost savings in the near term as a result, and perhaps an increased desire to procure cells from third parties (Panasonic). Longer term, if unresolved, issues could dent Tesla’s ambitions to sell 20M EVs in 2030 which would require expanding and improving its own battery-making capacity.