Tesla's Battery Day: A Run-Down of What Was Revealed - TheStreet

Tesla's Battery Day: A Run-Down of What Was Revealed

Tesla outlined ambitious goals for ramping battery production and lowering manufacturing costs. But shares sold off as details were discussed.
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Tesla’s  (TSLA) - Get Report stock went on a roller-coaster ride as its Battery Day even unfolded.

Shares initially rallied as Elon Musk outlined his company’s ambitious battery manufacturing and cost-reduction goals, but turned lower as details were shared on how long it might take for these goals to be reached.

Tesla’s stock finished after-hours trading on Tuesday down 6.9% to $395.08. Shares previously dropped 5.6% in regular trading following tweets from Musk that tempered expectations regarding the near-term impact of Tesla’s battery advances.

Battery Day followed Tesla’s annual shareholder meeting and was co-hosted by Musk and Drew Baglino, Tesla’s SVP of Powertrain and Energy Engineering. Here’s a run-down of notable things that were shared.

2020 Deliveries and Autopilot

Musk said Tesla will “probably” see 30% to 40% vehicle deliveries growth in 2020. For comparison, the consensus among analysts polled by FactSet is for deliveries to grow 31.5% this year to 483,000.

Musk said Tesla will “hopefully” release a private beta for the full self-driving (FSD) version of Autopilot, which features a full rewrite of the codebase, in a month or so. For comparison, last year Musk was promising 1 million robotaxis would be on the road by the end of 2020.

Battery Production Goals

As previously signaled, Tesla plans to start making its own lithium-ion batteries for use within its products, in addition to relying on third-party battery suppliers such as Panasonic and LG Chem. The company set goals of having 100 gigawatt-hours (GWh) worth of annual production capacity by 2022, and a whopping 3 terawatt-hours (TWh) of capacity by 2030.

For comparison, Tesla’s Reno Gigafactory, which is used by Panasonic to make batteries, was said to have an annual production capacity of 150 GWh. Tesla forecasts an 18% reduction in battery production costs from greater economies of scale and other manufacturing efficiencies, and says its goal is to boost the annual output of individual production lines by 7x to 20 GWh.

Musk also estimated that 10 TWh of capacity would be needed to transition all global vehicle production to EVs, and observed that EVs still claimed less than a 2% share of global vehicle sales.

The 4680 Battery Cell

Compared with Tesla’s current 2170 battery cell, the company’s just-revealed 4680 cell (the “46” refers to its 46mm diameter, and the “80” refers to its 80mm length) is both much larger and lacks battery tabs.

The "tabless" design both simplifies the manufacturing process and increases energy density. Tesla asserts the 4680 will be 14% cheaper to make (on a cost per KWh basis) than the 2170 at the cell form factor level and will boost vehicle range by 16%.

Baglino said Tesla has begun ramping production of the 4680 at a pilot line at Tesla’s Fremont, CA plant. However, Musk said it will probably be about a year before the pilot plant’s annual capacity hits 10GWh, while adding that (when they arrive) fully-fledged production plants will have a capacity of around 200 GWh.

Tesla's long-term battery technology and manufacturing goals. Source: Tesla.

Tesla's long-term battery technology and manufacturing goals. Source: Tesla.

Dry Electrode Technology

As rumored, Tesla plans to use dry electrode technology (obtained via the 2019 Maxwell Technologies acquisition), and promises the move will yield major reductions in the capex, plant space and energy needed relative to the use of a traditional wet electrode process.

However, Musk cautioned that commercializing the technology remains a work in progress (Maxwell’s technology was referred to as a “proof of concept”), and that challenges will need to be addressed at every part of the production ramp.

"There's a clear path to success, but a ton of work between here and there," Musk said.

Silicon Anodes, High-Nickel Cathodes and Lithium Mining

Musk and Baglino outlined plans to use raw silicon (rather than graphite or costlier engineered silicon materials) to make battery anodes, while asserting that the company has addressed the technical challenges that prevented others from making such a move. Tesla estimates that this switch will boost vehicle range by 20%, while lowering battery production costs by 5%.

Tesla also says it’s developing high-nickel battery cathodes that require no cobalt, and that (to help boost production capacity) it could also use a mixture of nickel and manganese for some vehicles. The company estimates this move can cut battery production costs by 12% and boost range by 4%.

The company plans to build its own cathode plant, along with a lithium conversion facility that will be placed next door. In addition, Tesla plans to mine some of its own lithium in Nevada, using an environmentally-friendly process that requires just clay and salt.

‘Structural’ Batteries and Single-Piece Rear Casting

In a move that Musk compared to making a fuel tank part of a plane’s body, Tesla plans to turn a car’s battery packs into structural components of the vehicle. The company estimates this move will reduce vehicle mass by 10%, boost range by 14% and lower battery production costs by 7%.

Musk also said Tesla plans to start making the Model Y using a single-piece rear casting, while adding that Tesla had to develop its own aluminum alloy to make this possible. The company asserts this move will lower rear body production costs by 40%, and result in 79 fewer parts being used.

Cybertruck Reservations and International Plans

Musk indicated Tesla has amassed more than 600,000 reservations for its Cybertruck (of note: the reservations cost only $100 and are refundable). He also speculated the total market for the pickup could be in the range of 250,000 to 300,000 vehicles per year, and said Tesla plans to eventually offer a smaller version of the Cybertruck for international markets.

Plans for the Model S Plaid and a $25,000 Car

Tesla’s ultra-high-performance Model S Plaid will be available by the end of 2021. The car, which costs $139,900, is promised to have a sub-2-second 0-60 time, a sub-9-second quarter-mile time and a range of more than 520 miles.

With the help of battery and manufacturing advances, Tesla plans to eventually sell a $25,000 car, Musk said towards the end of the Battery Day event. He insisted that he’s confident Tesla can make a “compelling” $25,000 vehicle in three years or so.

For more on Tesla check out Tesla Maven Rob Maurer.