And it will either cement their lead in the EV world or sink them.
We all know that Tesla not only initiated the EV revolution, but has also been far and away leading it for more than ten years. Other automakers are now finally coming up and providing their own long-range, quick, and inexpensive EVs after years of being behind. This sudden upsurge has weakened Tesla’s formerly invincible position as the leader of the EV industry. However, a stunning disclosure made recently revealed that Tesla will be deploying a surpising new battery to reclaim the lead. Although Musk might not like it at all, this battery also provides a fresh image of Tesla’s future. So what exactly is this battery? Why would it benefit Tesla? What are the repercussions of them using it?
This is huge news because the Model Y, which should be Tesla’s best-selling vehicle, was supposed to be the one to get the 4860 first. You see, the 4680 was not intended to be a technological advance. Instead, because it drastically decreased the total number of cells required, it was intended to make Tesla battery packs simpler and more affordable. Tesla therefore wants all Model Y vehicles to have the 4680 since it will increase their profit and allow them to significantly undercut their competitors’ prices.
CATL’s M3P was designed to do the same thing, except it did it in an entirely different way. The 4680 tried to reduce costs by changing its form factor, whereas the M3P did it by changing its battery chemistry. You see, the 4680 is a typical lithium-ion battery, so the cost of the raw materials stays the same (apart from housing material costs) as older cell designs. But the M3P is based on LFP cells (lithium iron phosphate), which use an entirely different chemistry to store and discharge energy. As it happens, the iron and phosphate that these cells use are cheaper than the graphite, manganese, nickel, and cobalt used in lithium-ion batteries, making the battery far more affordable.
LFP batteries have been available for some time now. They have a lesser energy density than lithium-ion yet are nonetheless highly inexpensive and durable. Because you need more cells, which negates the cost advantages of LFP and makes the EV poorer to drive, the majority of EV manufacturers haven’t employed them. LFP technology has advanced for the M3P by CATL to become just as energy-dense as lithium-ion batteries, if not more so. This eliminates all of the LFP packs’ prior drawbacks and brings it on par with the 4680 in terms of price, density, and charge/discharge specifications.
But the M3P has one significant advantage over the 4680: As it achieves these cost savings without changing its form factor, it can be built using current production lines, meaning its production can be scaled up far more quickly than the 4680. Furthermore, down the line, CATL could produce 4680-sized M3Ps and take advantage of both methods of cost-saving.
With this in mind, it is no wonder that Tesla has adopted the M3P into their line-up. They are struggling to ramp up production of the 4680, which means that using a similar battery with comparable price and performance will allow them to hit their production goals without compromising on their product’s price or performance.
It isn’t unusual for Tesla to use multiple battery suppliers. They have been doing it for years. It means they are less affected by supply chain changes than anyone else. So just because they will be using the M3P doesn’t mean their 4680 is dead.
But what is fascinating is that they have adopted this 3rd party technology so quickly.
Firstly, it shows that they aren’t wedded to their 4680. Tesla wants to manufacture its own batteries, not just because it allows them to use unique technology, but also because it gives them higher margins than their competitors (via profit from the sale of the car and its battery pack). So, if Elon’s future plans for Tesla required this extra income, he couldn’t use the M3P and would instead be focused on ramping up 4680 production.
Secondly, this flexibility could be the key to Tesla’s future. It was only a matter of time before other battery manufacturers caught up and overtook Tesla’s technology. Tesla, on the other hand, can stay ahead of the competition by being flexible and adopting better packs faster.
I mean, the time between CATL’s announcement of the M3P and the announcement that the M3P will be in Model Y’s was a matter of weeks. That is an incredibly speedy adoption that most other automakers would struggle to do.
But it does raise the issue of whether this signals the end of Tesla’s ground-breaking 4680 battery. Yes, that’s possible. If the M3P is more affordable, has a comparable energy density, and can achieve the charge speeds and performance required by Tesla, it appears like Tesla may soon replace their in-house technology with the M3P. However, we are not yet certain about this. We’ll have to wait and watch what transpires after the first Model Ys with M3P technology are used in public.
Either way, this shows the route for Tesla to keep its EV crown isn’t through its own advancements like it used to be. This method of out-developing the competition has worked for years, but as the wider industry catches up, it becomes less and less effective. CATL demonstrates that third-party suppliers can now out-compete Tesla at its own game, and the only way for Musk to keep his industry lead is to change the game they are playing. Instead of out-developing, Tesla must now out-adopt. By being ultra-flexible and embracing new third-party technologies faster than anyone else, Tesla can keep one step ahead.
Luckily, Tesla is in a great position to do this. Their production lines are set up for fast incremental upgrades, unlike traditional auto manufacturers who take time to overhaul their inflexible factory processes. The only thing that could derail Tesla from this new course of action is if they become too greedy. Musk will make ten times more money per vehicle by selling cars with the 4680 in them, given he profits from the car and battery sales. If he pushes this through and ignores the benefits of technologies like the M3P, then other cars will soon be cheaper, faster charging, more durable, and have longer ranges than anything Tesla has, and their sales will tank – TRENDY WORLD BY