Tesla’s 4680 battery cell, a key component in the Model Y and Cybertruck, faces significant production challenges that could lead to its cancellation by the end of 2024 if improvements are not achieved.
Since 2020, Tesla has been developing the 4680 cells, promising lower-cost battery packs and increased production capabilities. However, these benefits have yet to materialize. According to a report from The Information, Tesla CEO Elon Musk has set a year-end deadline for resolving the production ramp issues.
Sources indicate that Musk is considering abandoning the 4680 production ramp if the team cannot find a solution. Electrek reports that the dry cathode production process may be a significant obstacle. While sources cited by The Information do not confirm that the 4680 cells will be entirely discontinued if the ramp is scrapped, such a move could result in substantial cost adjustments across Tesla’s EV lineup.
Currently, the 4680 cells are used only in the Tesla Cybertruck and certain versions of the Model Y. Changes to the 4680 supply would therefore primarily impact these two models. Other battery manufacturers, including BYD and CATL, produce their versions of the 4680 cell. LG Energy Solution (LGES) has begun pilot production, and reports indicate that SK On, Samsung, and Panasonic plan to start 4680 production soon.
The most significant implication of abandoning in-house 4680 cells for Cybertruck and Model Y production would be the loss of the $7,500 IRA EV tax incentive, which has made Tesla’s EVs more affordable compared to competitors relying on battery technology predominantly sourced from China.
“It’s surprising because the Cybertruck is such a unique, one-of-a-kind, unusual vehicle, really as far out of the mainstream as you can get. On the other hand, it doesn’t surprise me because Elon Musk thrives on doing things like this,” noted Tom Libby, associate director of industry analysis at S&P Global Mobility.
