Tesla is racing to bring its new battery production facilities to fruition to make the Cybertruck electric ute and the electric Semi, prioritising cell supply for its range of electric vehicles over battery storage in the meantime.
Both vehicles have been anticipated for some time, and it is not the first time that Tesla has noted their production will be delayed as the EV maker pushes cell supply to existing electric car models first.
But it is the first time that Tesla has outwardly noted the need to ramp up production as soon as possible, and implied that a downturn in Powerwall production will also affect Megapack production until more cells are made.
“Things will move as fast as the slowest parts of the entire supply chain, which goes all the way back to … raw materials, lithium and nickel and that kind of thing,” Tesla CEO and co-founder Elon Musk said in the company’s second-quarter earnings call on Tuesday morning (Australia time).
Noting that volume production of both vehicles is the only way to make them affordable, he said, “both are heavy users of cell capacity. So we’ve got to make sure we have some capacity for those two vehicles.
“Of course, it’s kind of pointless we can make a small number of vehicles … the effective cost, if you make a small number of vehicles, is … literally, you know, a million dollars apiece, or more.
“There’s a reason why you think the volume production, which is to get the economies of scale that get the cost down. We are looking at a pretty massive increase in cell availability next year.”
Tesla has been working on a new form factor battery known as the 4680 that it wants to make itself and also have suppliers make.
But before it can do this, it is still tackling with some production issues on its prototype line at its Kato Road, Fremont facility. One example given was “calendaring” the cathode to a usable thickness and consistency.
Musk said at the prototype level the company has a product that is reliable enough to use in electric vehicles.
“Really, this will definitely make the 4680 reliable enough for vehicles, and we think we are at the point where limited volume is reliable enough for vehicles.
“But again … limited production is easy. High volume production is hard. There are a number of challenges in transitioning from small scale production to large volume production.”
Tesla still plans to disperse demand for cells based on energy requirements of vehicles, while also doing away altogether with the use of cobalt. Musk says that compared to Apple, Tesla uses very little cobalt, which is in far less suply than nickel or iron and is associated particularly with child labour concerns in countries like the DRC.
“There’s sometimes misperception that Tesla uses a lot of cobalt but we actually don’t,” he said.
“Apple uses, I think almost 100%, cobalt, in their batteries and cell phones and laptops. But Tesla uses no cobalt in the (iron) phosphate packs and almost none in the nickel basis chemistries, so on a weighted average basis we might use 2% cobalt.
“Anyway … it’s really not a factor we expect to basically have zero cobalt in the future,” said Musk.
Musk said that over time, Tesla will use mostly iron-based chemistries for its electric vehicles, with nickel-based chemistries reserved for higher energy demand applications.
“I think probably there is a long term shift more in the direction of iron-based lithium-ion cells over nickel, as the energy density of … iron base cells and nickel basically lab cells,” he said.
I think probably we will see a shift, my guess is probably to two-thirds iron and one-thirds nickel or something on that order.
And this is actually good because there’s plenty of iron in the world, there’s an insane amount of iron with nickel is this much less nickel, and there’s way less cobalt.”
However, comments during the earnings call that suggested Tesla might be planning to save nickel for heavy duty and long haul vehicles other than the Semi truck – “road transports, ships and aircraft and that kind of thing” – were swiftly dampened, with Musk taking to Twitter soon after to clarify:
Ships are probably fine with iron cells, but aircraft need very high energy density for good range.
I’m not saying Tesla will do aircraft – we have our hands full with cars & solar/battery power generation – just that max energy density is needed for aircraft.
— Elon Musk (@elonmusk) July 26, 2021
Musk also noted the ongoing issue of the global semiconductor shortage.
“In order for Cybertruck and Semi truck to scale to volume …We’ve got to solve the chip shortage.”
“Regarding supply chain, while we’re making cars at full speed. The global chip shortage situation remains quite serious. For the rest of this year, our gross waste will be determined by the slowest part in our supply chain which is there a wide range of chips that are at various times, the slowest parts of the supply chain.
Switching to other suppliers is not always a viable option because it required massive overhauls of software. But Musk said in at least one case it was able to do this in a matter of weeks.
“We were able to substitute alternative chips, and then write the firmware in a matter of weeks, it’s not just a matter of swapping out a chip you also have to rewrite the software, so it was an incredibly intense effort of finding new chips writing new firmware integrating vehicle and testing in order to maintain production.”
Cars today are far more complex than Model T, with a global supply chain that is vulnerable to force majeure risk.
Like Model T, supply chain for battery EVs simply doesn’t exist at massive scale, so must be built in parallel.
Ideas are easy, production is hard.
— Elon Musk (@elonmusk) July 27, 2021
Bridie Schmidt is lead reporter for The Driven, sister site of Renew Economy. She has been writing about electric vehicles since 2018, and has a keen interest in the role that zero-emissions transport has to play in sustainability. She has participated in podcasts such as Download This Show with Marc Fennell and Shirtloads of Science with Karl Kruszelnicki and is co-organiser of the Northern Rivers Electric Vehicle Forum. Bridie also owns a Tesla Model 3 and has it available for hire on evee.com.au.