Tesla's Model Y Juniper 4680 battery quest won't pan out as Elon Musk is overpromising, says CATL

While Tesla is betting big on mastering its cheap 4680 batteries to take advantage of the government's subsidies while they last, the head of the world's biggest battery maker is skeptical about the viability of its plans.

In a recent interview, CATL's Chairman Robin Zeng talked about the company's US production plans, saying that it is open to US investments other than the technology licensing deals with Tesla and Ford.

The Nevada Gigafactory will reportedly start churning out batteries with CATL equipment and technology as soon as next year. While the type of batteries it will be making is not clear, the safest bet is on LFP cells. Even though Giga Nevada has 100 GWh of 4680 battery capacity planned, CATL's Zeng finds the whole premise of cheap cylindrical cell impossible to pull off.

"He's good for the chips, the software, the hardware, the mechanical things," he said about Elon Musk, but doesn't really get the 4680 "electrochemistry" that "is going to fail and never be successful."

The big problem with Musk is "overpromising," commented CATL's CEO:

Maybe something needs five years. But he says two years. I definitely asked him why. He told me he wanted to push people. He probably himself thinks it needs five years, but if you believe him when he says two years, you will be in big trouble. The direction is right.

Zeng said that he demonstrated to Musk why he can't make cylindrical 4680 batteries at 50% the cost of cells that Tesla currently uses, as promised on Battery Day way back in 2020, and he "went silent."

During the last quarterly earnings call, Elon was pretty optimistic that Tesla will not only achieve parity with its suppliers like LG or Panasonic in terms of manufacturing costs, but will also manage to make the 4680 battery the cheapest one produced in the US.

The cell 4680 lines, the team is actually doing great work there. The 4680 is rapidly approaching the point where it is the most competitive set. So when you consider the fully landed - the cost of a battery pack, fully landed in the U.S. net of incentives and duties, the 4680 is tracking to be the most competitive. Meaning lower cost considered than any other alternative. We're not quite there yet, but we're close to being there, which I think is, extremely exciting. And we've got several - a lot of ideas to go well beyond that. So if I think there's - if we execute well, the 4680 will have the - Tesla internally produced cell will be the most cost competitive cell in North America, a testament to a tremendous amount of hard work there by the team. So that's - we'll continue to buy a lot of cells from our competitors. Our intent is not to make to provide to make cells just internally. So I don't want to set off any alarm bells here. We're also increasing substantially our vehicle output and our stationary storage output. So we need a lot of cells. And most of them will still come from suppliers, but I think it is some good news that the Tesla internal cell is likely - is tracking to be the most competitive in the U.S.

The key phrase here is "with incentives," though, as the government doles out $35 per kWh of made-in-US battery capacity, and Tesla is expected to benefit in the billions.

Elon's optimism also stemmed from the fact that Tesla mastered the frugal dry cathode method and rolled out the first Cybertruck made with such cells not long ago. Tesla is now planning to expand its 4680 manufacturing capacity so that it can also make battery packs for the Model Y, Model 3, and the Robotaxi.

The upcoming Model Y Juniper facelift, for instance, is expected to be equipped with 4680 batteries in the US, as Tesla wants to keep its costs in check and price it in line with the current edition. The electric vehicle subsidies, however, might be on the chopping block when the new Trump administration comes, so the 4680 battery's "electrochemistry" might not be its only problem when it comes to manufacturing costs.

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