Tesla able to slash the Model Y price significantly with 4680 battery pack cost savings

The first Tesla Model Y units with the next-gen 4680 battery and cell-to-pack technology have been rolling off the conveyor belts at the Gigafactory in Texas. The structural 4680 cell pack uses plenty of hardened polyurethane to keep all the 4680 cells together and is on top of that integrated into the chassis, making it impossible to reach and repair individual units.

That same US-made Model Y 4680 battery pack, however, is currently up to US$3,600 less expensive to produce than the traditional Model Y battery with smaller 2170 cells as it needs 830 rather than 4,400 cells and only two weld points per cell instead of four; it is also much lighter than before. In order to reach Elon Musk's 50% battery price reduction promise, however, the Model Y's 4680 structural battery pack would have to come down to being US$5,500 less expensive than the 2170 battery before it.

Several industry analysts have pointed out that Tesla may be on the way to achieve this Model Y cost reduction as it masters the dry-coating 4680 cell production and scales it up by year's end. The dry-coating process is the most challenging part of the 4680 cost reduction crusade and that is why Tesla started with the price cuts it can achieve fairly easily.

If it wants to go further, however, and really slash the Model Y battery pack costs by 50%, it would have to learn to apply electrode coating with little use of liquids that have to be then evaporated in giant ovens, and do it on a mass scale to boot. Going from a wet to a dry electrode coating will allow Tesla to perform the process in factories 10x smaller and frugal in terms of energy consumption than they are now, cutting its capital outlays there by a third.

"They can produce in small volume, but when they started big volume production, Tesla ended up with many rejects, too many," tipped one of the industry insiders. Out of the 12 experts surveyed by Reuters on the matter, however, all agree that mass production of 4680 batteries by Tesla may spill into 2023, but it will eventually be done.

This would allow Tesla to cut the Model Y's retail price by 8%, or about US$5,280, they said. Moreover, mastering the dry-coating process for the 4680 electrodes would pave the way for the US-made Model Y to qualify for the government's new US$7,500 subsidy en masse. For qualifying buyers, this would mean a good US$12,780 Model Y price reduction from its current US$65,990 starting tag, and could happen as soon as next year.

Get the Tesla Motors 24' Cable Wall Connector on Amazon