Tesla 4680 team head aims for cheaper Cybertruck and Model Y battery prices before it's too late

Tesla recently parted ways with executives in various divisions such as public policy, powertrain, and 4680 battery production, because Elon Musk was reportedly displeased with the speed of progress in their respective departments.

The new 4680 battery development team head - Bonne Eggleston - used the first staff meeting to assure people that layoffs are over, then set lofty goals for the 4680 cells that many of Tesla's deliverables hinge on.

Apparently, Tesla aims to make the battery that goes into the Model Y and the Cybertruck cheaper to produce. In fact, Mr. Eggleston told the team that Tesla must lower the production costs of the 4680 cells below those of Panasonic and LG by 2025.

"Our goal," confirmed Tesla's lead engineer Lars Moravy at the Q1 investor call, "is to beat supplier cost of nickel-based cells by the end of the year."

This could lessen Tesla's dependence on suppliers, and earn it more of the tax credit subsidies that it now has to share with Panasonic.

Tesla, however, is not on the way to achieve the promised 50% cost reduction when compared to the more conventional cells it uses. The first 4680 batteries that went in the Model Y structural pack only lowered production costs about 20% in the easiest possible way, by simply taking advantage of the cell's larger size.

The harder part, mastering the dry-coated electrode production method that results in the greatest cost savings, has been achieved with limited success. Not only is Tesla able to make 4680 battery packs for just 60,000 Cybertrucks a year, but it is yet to begin mass production of dry-coated electrodes, too.

The former powertrain and battery materials exec Drew Baglino allegedly was all in on the dry coating method. He wanted Tesla to make the 4680 battery as revolutionary as originally envisioned, instead of scaling it in an iterative manner. He even mentioned to Sandy Munro upon his tour of the Cybertruck that the battery inside is done with dry-coated electrodes.

At the beginning of the year, however, Tesla set a less ambitious goal for the 4680 team, namely to make its batteries competitive compared to those of its nickel cell suppliers like LG or Panasonic.

Tesla's new 4680 team lead now comes to work on boosting yield and production capacity, as well as cut battery costs any way he can, including by sourcing cathodes from other suppliers if needed. This might be a more attainable goal than mass production of dry-coated electrodes, and has every chance of being executed by year's end.

Tesla reportedly felt that if it doesn't do this, it might as well give up on the whole own battery project. The team's engineers now worry that even if Tesla manages to beat Panasonic's production costs, that would still defeat the original vision for a drastic 50% reduction.

Compared to other batteries that Tesla uses, the 4680 packs don't have many other advantages in terms of safety, longevity, or charging curve, so the lowering of their manufacturing costs is still paramount for the viability of the whole project.

Tesla is in a race against time, as the world's largest EV battery makers CATL and BYD are now able to produce batteries that cost just $0.06/Wh. Even if Tesla hits its cost reduction targets by the end of the year, the Cybertruck's cells will reportedly cost twice that.

This may put competitive pressure on the Cybertruck and Model Y prices, and lower the importance of the 4680 battery as an avenue for EV cost reduction at Tesla.

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