Tesla Q3 Earnings // Battery Updates // Full Breakdown and Implications
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- Опубликовано: 5 июл 2024
- In the Tesla Q3 2023 earnings call, Drew Baglino made a statement about the 4680 production ramp that contained a lot of new information. Today I’m going to break down what he said line-by-line, what the implications are for the 4680 ramp, and what the impact could be on Tesla’s Cost of Goods sold.
In short, after 3 years of waiting, it appears 4680 cell production is finally poised to deliver on the exponential growth and cell cost reductions that were teased at Battery Day.
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Timestamps
00:00 Introduction
01:00 4680 Production Growth Rate
02:05 Texas is now the Home of the 4680
02:41 4680 Quality Control and Cost
04:41 4680 Production Starts on Line 2 in Texas
05:48 Converting to 100% Cybertruck Cells
10:53 Phase 2 Expansion Plans
11:48 4680 Capacity Plans for all Locations
13:32 Kato Road Skunkworks
16:32 4680 Ramp // Plans vs Reality
18:23 Projecting the 4680 Production Ramp
18:59 Will the 21% Month over Month Improvement Rate Continue?
21:03 Phase 2 Aligns with my Projections
22:42 Where will the Cells be Used?
25:19 How Much will the 4680 Reduce Vehicle Cost of Goods Sold?
28:29 Closing Thoughts
Intro Music by Dyalla: Homer Said 
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Lots of people are asking if they're doing dry coatings on both the cathode and anode. As I've covered in past videos, according to people who toured the facility, yes. I haven't confirmed that yet with a tear down, but that's the assumption based on Tesla's advice.
Note: I do an update every 3 months and that news is over 6 months old now, which is why I didn't cover it again in this video.
Dry cathodes would be a huge breakthrough, I assume that Tesla would make it very clear on the investor call if they had managed that.
Great video Jordan! Since Cybertrucks should be hitting customers hands on Nov 30th, it seems probable that Sandy Monroe and WhistlinDiesel will be tearing apart and trashing some in about 3 weeks. Have you connected with someone to get a newer CyberCell for another teardown? An updated teardown video in late December would be the best Christmas present I've recieved in years!!
Jordan’s deep battery dives are worth a 1,000x Wall Street analysts. Maybe a 1,000,000.
Word up!
Right on!
Jordan
With the greatest of respect to the majority of professional analysts.... You make them look like amateurs
Thank you 👍👍
☺️🙏
Tesla making their own batteries is on the same level as Apple making their own chips. This is massive news and allows Tesla to have control of their future.
This will also lead to Tesla being able to do some crazy stuff in the future with regards to range and pricing.
Reducing scrap by 40% *twice* in half a year's time suggests that the scrap rate likely was very high before.
However, we can use Tesla's statements to estimate a ceiling for the current scrap rate: Assuming the scrap rate was 100% in Q1, it can now be no higher than 36%. If the scrap rate was 83% in Q1, it is now 30%. So they probably currently get a yield of 65% to 75%, which ranges from decent to pretty good.
Correct! I probably could have been more clear there. It often takes longer to go from 80-95% than 0-80%.
40% reduction in scrap means nothing in regard to the total percentage of scrap. If they went from 1% scrap to 0.6% scrap, that's a 40% reduction too. The yield could already be 99% or higher for all we know.
@@ryen7512 you're completely correct, from just Tesla's statement the scrap rate is could be any number between 0 and 36%, but there are several reasons to assume that the scrap rate is high. Firstly, because the production line is new and just ramping. Secondly, because the rate of improvement claimed by Tesla is so very high. Like Jordan wrote in his reply, making a massive (64% reduction!) improvement in a short time is easier if you're starting from a relatively poor base. Such an improvement is simply extremly unlikely if the line was already running perfectly to begin with.
They don't scrap. They transfer unqualified batteries originally made to power theirs teslas to the storage systems. If you think they scrap their battery...
@@thelimitingfactor Jordan. Having religiously followed your analysis for a while and really appreciate your being so meticulous. I'd like to contribute one thing about scrap rate. Based on Drew's comment last quarter, that they achieved 25% improvement in COGS with 40% reduction in scrap rate. Assuming their cost recovery from recycling their scrapped cells is close to 0, then you can solve for their scrap rate in that sentence, which was 45% before reduction, 27% after in Q2, and have improved to 16% this quarter, yielding at 84-85%. Let me know whether you would agree. Again, really appreciate your work.
I believe batteries are at the heart of Tesla, especially profits. Any excess 4680 battery production can go into power walls, cybertrucks, possibly even Optimus. The lithium processing plant will also help a lot. They should start another 4680 line… it will just allow them to make more money and get the most out of their technology.
I'm not sure if there is a way to know when your videos are coming out. But it absolutely makes my day when I get a notification that you uploaded something new! Thanks as always!
Every 2 weeks on a Wednesday morning is what I shoot for 🤠
@@thelimitingfactor Then the next one will be perfect timing for my birthday!
Though I hope you take some time off to spend with family/friends.
@@thelimitingfactor I got a little confused after I had seen the very long video. Even you had said, I started to watch the suspected new videos that I had already seen in the large video.
Professional and well done! Tesla needs to give you a good tour of the line!
I'd love that!
Great stuff. You always manage to find overlooked tidbits.
😊🤜🤛
Brilliant video, as usual ❤👍
Oh yeah Jordan, whisper sweet battery nothings into my ear.
😂🌹
You always “bring it” Jordan. I love your work and the value you provide to the entire Tesla investment community on this most important pillar that determines the pace Tesla can grow. Batteries and the materials needed to make them truly are “the limiting factor” and you’re right on the money every time. 😊
Thanks for the kind words man! I appreciate it
Exceptionally good video as usual, thank you sir.
Was waiting for this video!!! Thanks!
Sure thing man! 🤠
Thank you!
You're most welcome Mr fox!
Seems to me Tesla have kept 4680 vols lower (only 1 line) until they were happy with what they are producing but they are now getting there and can start to replicate what they already know works. Surely the next 3 lines will be developed in parallel so, rather than a steady 21% growth, we should expect a straight line for a while and then a short transition (as the new lines settle), to near 4x production ?
Nah, one at a time. It's a lot of work to ramp a line. They'll learn things from each ramp. Much more efficient.
Hey Jordan, I really enjoyed your previous video where you did a 4680 tear down. Now that improvements have been made, do you plan to do another tear down?
Heck yeah! As long as I can get a cell
IMO, cost is everything, at some point subsidies will go away, and the ICE battle is not done yet. However, the good news is Tesla will win because of their manic focus on cost. 4680 ramp speed trouble was unfortunate, but understandable in hindsight. If it were not for Jordan I would have been lost and confused on why?
🤜🤛
Excellent work once again Jordon! Thank You!
Thank you for completing all this research and adding a suitable narrative to explain the progress you believe is happening. Much appreciated.
You're most welcome!
Superb report Jordan.
Always great to get the news on 4680s from your deep dives Jordan. Keep up the awesome work! 🤜🤛
Thanks for watching man!
Great analysis, thanks.
sweet! thanks Jordan
🙌🤠
Great video, thanks
Sure thing man! Thanks for watching 🤜🤛
Thanks buddy
Your most welcome!
Thanks!
🙌🏼🤜🤛
Thanks. This is awesome.
Luv your stuff, Jordan. Any thoughts on China about to limit export Graphite ?
I'd say Tesla needs to accelerate their in-house anode plans 😬
I don't know what effect it will have on them in the short to medium term, but that single point of failure needs to be addressed
Jordan, amazing video as usual! I wonder if the dry electrode “mystery” and GFTX phase 2 are connected? Specifically, perhaps 8 lines instead of 4 are now needed in order to achieve 100 GWh hours of original total capacity target, because getting DBE to work on both anode and cathode requires slower line speed compared to original specifications. Drew mentioned how brutal the ramp is, with crazy novel challenges popping up as soon as a new level of scale has been reached. Recall him talking about fine dust particles becoming an issue after they managed to speed up a particular part of the process. The work they are doing is heroic. Just incredible. If they master DBE at scale it will be yet one more way Tesla has leapfrogged us closer to a sustainable energy future. Thanks for all you do for the community. Much appreciated!
Sure thing man! Glad you enjoyed it 🙏
That could be the case, but I haven't seen any indication that the machines only now have half the output.
That doesn't mean it's not the case, but giving the lack of evidence in any direction, I'll just wait to see how things emerge
Good to see the spoon back in the process
It would be interesting to see the difference in embodied energy and CO2 emissions between 4680 (dry electrode) and a standard battery like 18650.
🤗 THX JORDAN 👍💚💚💚
Sure thing buddy!
can't wait for 4680 LFP... battery
When you read back the second quote you added the word PRODUCTION, which did not appear in the text on the screen.
Unlike others, it is a pleasure to listen to your well researched presentations multiple times, and feel you are doing the hard detailed work for all of us -THANK YOU.
Tesla is innovating on so many fronts that honing in on one is almost irrelevant - Is Cybertruck more important than land clearing and construction at Texas ? How important is Mexico ?
With a source of batteries secured for the next couple of years Tesla can afford time to get 4680s really humming, improving in multiple iterations. It is leading technology, ahead of established giant battery producers.
Adding to what you said, Corpus Christie, the cathode plant , chemical formulations , sodium , silicon carbide, maganese, LFP are ticking away in back ground. Tesla can not afford even a minor recall. YOU CONFIRM MY BELIEF IN TESLA.
Your battery cost per KWh are off by about 22 to 30% . The average battery price at cell level was $78/KWh for NCM and $71/KWh for LFPs in China last month. For storage applications it was below 70...(old LFPs)
You didn't listen to the caveats that I put in there
Adding on to your point at 28:00, If Tesla wanted to keep GM% where it is then you could take off another 17% of $6,400 = ~$1,000 from the ASP to bring it down to $36,600. (If they really wanted to)
Or at $37,600 the GM% would be ~21% by your calculations
Jordan: besides the scrap rate I commented here three days ago. I also think the gap between your projection of 67% growth rate in cells vs. Drew's 40% production rate growth in last quarter could be due to the reduction of scrap rate, which happened to provide 16-17% more cells in addition to the production rate growth based on my scrap rate calculation. The extra difference could be explained away by cost recovery of scrapped cells. If that is true, next quarter, the benefit from reduction of scrap rate will slow down and your assumption of 21% monthly growth rate could be off. Of course, all these are simple linear extrapolation, which could be off significantly as they accumulate ramp-up progresses. But running at only 20-23% of the designed capacity (or line speed), the team might still follow some simple numeric goal in pacing both the speed and scrap improvement.
Gordon Johnson never comments in here. What a pity
😂
Excellent review…do the cost saving for 4680 include the saving from Cathode & Lithium refining plants?
No 😎
Ecksellent info!
🙌🏼🤠
Great job! another master piece....You and Rob Maurer are the Tesla community objective eye ! Thanks for your effort and passion
That's high praise thanks! Love Rob
Wow, being european I never quite realized just how *far* away Kato Road is from Giga Texas. Shipping cells all that way must add a lot of cost.
Following on your comment...
Americans are often thought to be fairly homogenous in our culture and outlook. However that is incorrect. Just like the individual countries in Europe, different regions in the US have very different cultures and world views. This is why our politics are in such a mess. Even more so, I gather, than the EU's politics.
Does anyone know how vulnerable to current inflation rates are tesla’s processes, and materials? Is there any reason to believe they would be more resistant since they control so much of the whole process?
How do the new buildings in Austin (Cathode plant) fit into the analysis?
As I said in the video, they probably have backup plans if those don't ramp in time.
It's just material that feeds the battery lines
I suggest that it is highly likely that the Kato Road facility will be used for testing new manufacturing equipment along with new cell chemistries, since changes in chemistries will often require different equipment and/or major changes to existing equipment that cannot be done with simply adjusting or tweaking existing equipment. It is always more effective to do this in an actual functioning test line, as one can see how each change affects the entire line and production process.
I have seen new equipment introduced into a line to "improve" it, only to have production grind to a halt because the new equipment didn't work properly. Smart managers keep the old equipment just in case, and are not attached to the sunk cost fallacy that will keep some people trying to make a bad piece of equipment work to the detriment of the entire production line. The richest business person I ever met told me that the biggest mistake that most business managers make is that they forget they are in business to make money, not save money.
Excellent and very logical analysis and presentation. Love it.
I have not heard you talk about the large building Tesla has acquired next to Kato Road facility to produce 4680 batteries. If they start producing 4680 cells there then the number of cells produced by Tesla will be huge.
Do you see a point where Tesla sells 4680 batteries to other BEV companies?
Yeah, it's unclear to me exactly what's going on with the expansion. It's something I thought about covering, but there was just too many question marks. When we know more I'll cover it.
It all depends on supply and demand in terms of selling to other BEV companies.
And it depends on if the other companies survive.
Waiting for more news on this new building.
Do you know if Tesla has been able to apply the dry battery electrode process to both annode and cathode yet?
Do you expect Tesla to increase the ramp of Cybertruck when they discover how strong the demand for this product really is?
This helped me to understand the challenges Tesla has faced with ramping 46-80 cell production. While LFP cells using that form factor are not out of the question, it does make more sense to concentrate ramping of 46-80 on high nickel cells for the Cybertruck and the Semi.
They confirmed it's dry on both.
They're already ramping as fast as they can - but it's an entirely new product category so it'll take time
🙌
@thelimitingfactor That is huge news! That also explains why the ramp of 46-80 cells didn't begin in earnest until recently. This is much better than so-called solid state cells that still have a liquid electrode (and no, i'm not talking about Tesla when I mention solid state cells). Thank-you again for your videos.
when do you expect silicon to be included as well as ur estimate for wh/kg for gen 3? i remember elon saying 4680 could possibly hit 500wh/kg in future?
They'll incorporate it slowly, which means they'll probably start around 290 to 300 watt hours per kilogram.
But it's going to be a decade before they hit 500 watt hours per kilogram in a Tesla cell, and even that is optimistic.
@@thelimitingfactor anything else in the nearby feature that could also raise the density? Dry coating?
Hi Jorden
I tried to order a couple of your sweatshirts but your system didn’t recognize our address and wouldn’t let the process continue.
Hi Robert! That's frustrating 😞
Unfortunately it's not my system.
Teespring is a separate company and the customer service portal that you have is the same as the one that I have.
Is the scrap being recycled?
Yes...they've been doing that since the beginning of 4680 production and for the last couple years at Nevada
Totally unrelated question here for you man. But do you have an opinion on why tesla isn't using lmfp or m3p cells from catl yet?
The stuff I found said or claimed tesla would be delivered those pack's in Shanghai from q4 of 2022.
And we know catl has just finished an up to 80gwh cell plant literally within shooting distance of their Shanghai plant.
Could that new plant be for the new energy storage factory tesla is just about to start building?
Or could it be for supplying them with next gen lmfp, m3p, quilin, the 4c cells, or even condensed matter cells directly. 🤔
Yeah, peple were hyping the shit out of M3P, but they let their imaginations get way ahead of reality. It was always just rumours and CATL never even held a launch even - and they always do for new chemistries.
The 80 GWh factory is probably for the cells that Tesla needs for their 80 GWh of megapack capacity.
Anyhow, I did a whole video on CATL M3P and also Roadmaps for all chemistries in the past few months.
@@thelimitingfactor harsh words man, but so true to. I was somewhat of an lmfp/m3p fan myself.😀
What about those quilin, condensed matter and shenxang 4c whatever cells? Are those legit since they all had launch events and if so will tesla even use them. 🤔
Finally I thought the new megafactory was another 40gwh unit like lathrope? 80gwhs would be insane for 1 plant, but typical tesla speed to! 😁
What are the chances of Long Range Model Y that is made in Texas to be using the 4680 cell 1st quarter of 2024?
There's not way to calculate that
I'd love to see a Tesla Semi XS edition, with an ⅛ of the battery capacity and crossfeed power from a battery, solar and/or hydrogen trailer.
This would equate to 3 or 4 extra battery packs they could transport, compared to a diesel semi on American roads.
That would overcomplicate things
Need my Novonix and NMG to eventually be worth something 😅
lol! Fingers crossed
how do you see that Elon said "tesla doesn't use 4680 at all for the iron-based cells" in 4Q21's earnings call?
I don't know what question you're asking.
Either way, I've made a video on each quarterly earnings call, going back a couple of years
A quiet revolution in lithium ion battery safety has been happening literally right before our eyes for the past few years. Not in the car industry, nor in the energy industry, but in the smartphone industry. Billions of smartphones are sold globally each year. Yet the number of smartphone fires seems to be declining to the point that it's not really a thing anymore. These improvements in lithium ion battery manufacturing quality and fire safety are mostly unreported and quietly game changing for the smartphone industry, and beyond.
How many 4680 gen 1 and 4680 gen 2 were produced, when the 20 million cell was announced in oct 2023 ?
20 milllion gen 2, no word on Gen 1. Probably much less than 20 mil
@@thelimitingfactor What about "1 million 4860 cell announcement" ,in feb 2022, with a picture of people, I suppose, outside of kato road facility ? Where those also 4680 gen 2 cells ?
@@thelimitingfactor For me its hard to imagine, that in the 20 million 4680 count, tesla wouldnt include both the 4680 gen 1 cells, that they installed exclusively for one reason or another in the tesla model y and the 4680 gen 2 or cybertruck cell .
Hi Jorden
I tried to buy a couple of your sweatshirts and it didn’t recognize my address. You responded that you didn’t have a way of dealing with that. I’ve tried 2 friends addresses that didn’t work either. ??
Hi Robert! They give a few options for customer support:
community.teespring.com/training-center/teesprings-customer-support/#:~:text=Customers%20should%20contact%20Teespring's%20customer,via%20support%40teespring.com.
Keep up the great work Jordan.
I know you do not lack projects, but the unions trying to pressure Tesla to unionize has me wondering about labor factor. If many companies copy Tesla in terms of production, there is going to be far fewer jobs. I am not counting Teslabots, just everything else Tesla is doing in their factories to keep the smallest number of humans involved in production as possible. Does that protect Tesla from unions in the sense of unionizing dozens of people not likely to happen or worth unions effort. They want to grow their membership numbers to pull those dues dollars in each month. Could Tesla via high automation lower union threats?
It was just something hitting me as we watch these union strikes and threats
I would understand if you avoid the topic for fear of it being a political powder keg.
People will always be needed, and higher skilled people are less likely to unionize. If bots take the easy jobs, that leaves higher skilled jobs
👍👍
🤜🤛
If Line 1 at Giga Texas is at 5 GWh/a right now, I'm not confident they can ramp it to 25 GWh anytime soon, or at all. Is it possible that the plan is still 100 GWh for Texas, but using eight production lines instead of four to achieve that?
Everything they've said indicates 100 GWh from 4 lines.
@@thelimitingfactor thanks. your analysis in this video is excellent (again), so I'm happy to trust your judgement for now
Well, I wouldn't say that's a judgement, it's just the information we have. Put your faith in the lord, I'm just here to share what I find 😁
Tesla bears are wrong on this company. People are reading the Q3 earnings wrong. Q3 was a building quarter. Tesla repositioned their pricing to keep the advantage and they also temporarily shut down factories to make improvements that would pay dividends in the future. All of this comes at a temporary hit to net earnings, but gives them a huge advantage going forward. The recent comments out of Tesla China demonstrate what this company can do when they invest in improvements. Tesla China now puts out one car every 30 seconds, something legacy Auto could only dream about. This means that a single factory can be twice as productive as any legacy auto factory. Factories cost money and having employees standing around doing half as many cars per factory costs money. This is why legacy Auto has such a difficult time putting up consistent profits. But Tesla is now at a point where their manufacturing process is so advanced that they can get 2x more productivity out of each factory. And I would expect that by this time next year they will be telling us they are putting out one car every 20 seconds. They are constantly improving their production lines and squeezing out cost. The automation that takes place in a Tesla factory could never happen in a legacy auto factory because the UAW would never allow it. They would go on strike before they would ever allow Ford or GM to reduce their workforce. Detroit used to be one of the wealthiest cities in the country and it is a ghost town now because the UAW squeezed too hard for too long.
All EVs needs more juice , I mean Tesla Model Y LR+ 2024 with 100kWh battery pack and end price under 70k $ could be a Game Changer
I’m always surprised at how surprised we are that getting innovative technology from prototype to ramping mass production takes significant time. This year and 2024 are consolidation periods for Tesla, 2025 and 2026 are expansion years, both product and facilities, 2027 and ‘28 will be further consolidation years as new products expand into those facilities. Just my view, obviously.
I mean we are used to 100% growth rates from Tesla, so that even 50% growth feels slow. Elon usually promises the sky and delivers it late (but usually actually delivers).
Need to pause the Model S in Fremont and build cyber trucks there...
It's easier just to build new lines then to shut current lines down and replace them
Why would you turn off a mature, $1B/Q revenue stream with great margins to replace it with an immature, lower revenue, lower margin stream?
If this happened it would be fantastic. In my mind this is overly optimistic, considering their track record. I Think growth will be much lower, especially q4 2023 - q2 2024, Sinch the added 4 Lines probably will not produce.
Fair enough! I certainly don't have a monopoly on the truth 😁
Manufacturing capacity at Tesla is rising at a good clip. There is no reason to think that capacity will hold Tesla back.
Raw materials, however, may be another story.
For example, China is the source of about 95% of battery-grade graphite. The CCP has put graphite on its export restrictions list, because why not? China wants to ramp its own battery manufacturing. In fact, the CCP aims to dominate batteries worldwide. Every ton of exported graphite is a ton enabling foreign battery manufacturers to compete with Chinese suppliers.
That's only an example. China also slapped export controls on rare Earth metals and other raw materials where China is the dominant supplier. The CCP's aim is the same: support domestic manufacturers and impede foreign competition.
It's a trade war. And it's heating up.
Globalization is no longer quite so frictionless. According to geopolitical analyst and author Peter Zeihan, globalization is ending. New sources of supply will have to be found, and many industries will be re-shoring or near-shoring. During this transition, shortages are likely.
I think it's a bit premature to declare that Tesla won't have trouble achieving its manufacturing ramp targets.
Judging from Tesla's own actions, I think they see this trouble brewing. Cybertruck production goals seem to be dropping - from 375K to 250K to 200K annually. Semi's ramp is going at a snail's pace. The Monterrey Gigafactory seems to be delayed.
Semiconductor supplies could also be affected by globalization's wind-down.
Tesla has bright people who will aggressively seek solutions. But outcomes are uncertain. Bottlenecks could appear.
Arguably, some already have.
🎯
Make's Tesla's almost fanatical commitment to localized supply chains almost prescient, doesn't it?
@@tysonn4736 Elon saw the need long before I did. That guy is scary.
test
icle 😁
ELON’S MIDDLE NAME IS “CHANGE-IMPROVE” DAILY TO BE LESS WRONG CONTINUALLY
Not trying to be negative here or anything, but could you please use "rapid expansion", "rapid acceleration" or something similar, instead of "explosion in production", when talking about battery production? I just think it has some rather negative connotations attached to it... 🫣
😂 Fair Point