Elon Musk, CEO of Tesla, said he was a “catalyst for the company’s future” when shareholders decided to give him a USD 56 billion compensation package based on the company’s current stock price.
But a crucial component that would have changed the course of the business and drastically cut expenses, enabling initiatives like the mass production of the Semi in 2021 and a Tesla EV for USD 25,000 in 2023, has not yet materialised in 2024: Tesla’s remarkable cost-cutting efforts in its 4680 cells.
“We are hopeful that the way forward is going to be difficult in achieving cost parity with our own cell production by year-end,” Musk said regarding the hurdles.
Tesla had brought focus on the 4680 cells when it announced the Battery Day event in September 2020, saying that it can bring the costs down significantly compared to present suppliers on an energy basis and it could possibly sell batteries to other automobile manufacturers. In confidential information, Musk admitted that, for the present time, 4680 Tesla cells cost more than the direct supply though it was significantly more a year ago.
Musk’s more grounded outlook in 2024 is in stark contrast to the bullishness seen after Battery Day in which Tesla outlined further as far-reaching cost-cutting paradigms. However, getting cost competitive remains a challenge for Tesla, even as the prices of EV batteries rose in the aftermath of Battery Day, only to drop later.
Industry experts also forecast a significant fall in the cost of batteries for EVs by 2025, which will reignite the buying force. However, the trends today look rather different from Future Day envisioned during Battery Day, as China can cover the entire demand for EV batteries across the globe.
There has been a slowdown in Tesla’s battery technology development, the 4680 cells, which are main to scaling semi-production. Nevertheless, there are problems, for example, new technologies for mass production necessary for Tesla, as well as battery cost goals that currently stand at 150 per kilowatt-hour, continue to push forward, with Tesla planning on achieving battery costs that are in alignment with industry averages by the end of the year.
In conclusion, while Musk is optimistic about eradicating the cost injustice or achieving the envisaged 50% savings today, it is as elusive as it was in 2020.
