Tesla will make the cheapest EV battery in the US with new 4680 cell technology

Tesla is reportedly going to equip all of its bestselling vehicles in the US with customized 4680 cells made in its own factories, and it is now confident that it can make the cheapest EV batteries in the US.

There will eventually be four different types of 4680 battery packs, like the current ones it makes for the Cybertruck, that will be designed and ready for production in 2025.

The other variants will be tailored for use in the 40 kWh battery that will power the 200-mile range of the upcoming Robotaxi, as well as for the Model 3 and Model Y that Tesla sells in large volumes.

Just this spring, Tesla's volume production of 4680 batteries wasn't going according to plans. Elon Musk even had to dismiss Tesla's battery head and the person responsible for the 4680 production expansion at Giga Texas, as their vision was to proceed with its development in a more gradual manner.

During the annual shareholder event, Musk even mentioned that if Tesla can't lower the production costs of the 4680 battery to that of its suppliers by the end of the year, it will throw in the towel and source them from Panasonic or LG.

Tesla then appointed new 4680 battery development team head - Bonne Eggleston - who set lofty production goals from the very first meeting. A couple of months later, Tesla achieved a 4680 battery breakthrough and demonstrated its first Cybertruck with factory cells made with the cheapest dry cathode method.

Tesla is now ready to produce dry cathode batteries en masse in 2025, and may soon hit the promised 50% cost reduction goal that it announced on Battery Day in 2020. So much so, that Elon Musk said during the Q3 earnings call that the Tesla-made 4680 cells will soon go into the cheapest battery packs ever produced in the US when accounting for import taxes on supplier cells, as well as the federal incentive of $45 per kWh of made-in-USA batteries.

This may allow Tesla to lower the prices of its vehicles under the proverbial $30,000 mark, added Elon, but he was quick to point out that Tesla will still order a lot from its suppliers as its vehicle and energy storage businesses grow:

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 [Indiscernible] 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.

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