Tesla’s Battery Day on September 22 did not disappoint. Whether you came away encouraged (as did many EV enthusiasts) or disappointed (as did the stock market), Elon and the gang provided ample content for the advanced battery community to dissect and debate for the next six months.
For me, the most noteworthy content was not the technical detail of where Tesla is going with its battery technology. The move to tabless 4860 cells, more silicon, less cobalt, away from solid state technology (apparently), and the road map to a 56% reduction in battery costs were all very interesting topics, if not entirely novel.
For me the most interesting take-away from Battery Day was that Tesla now apparently sees itself as a battery company rather than a car company. Car sales may drive its revenue growth. But Tesla recognizes that reducing battery costs is the key to increasing vehicle-driven revenue growth and that efficiently manufacturing of battery cells at very large scale is the key to reducing battery costs.
This, of course, is what NAATBatt has been saying for 10 years. He who makes the batteries will one day make the cars.
The big news about Tesla from Battery Day is that, having recognized efficient battery cell manufacturing as the principal challenge of its business, Tesla has decided to address that challenge directly and manufacture battery cells itself. This decision stands in contrast to so many of its automotive OEM competitors, who, seeing the same fundamental challenge to their businesses, have elected to outsource the problem to third party contractors.
Lithium-ion battery cells will be one of the most important technologies of the 21st Century. Batteries will power the myriad of devices that run on electric energy unattached to the grid. Those devices are what will make the 21st Century fundamentally different than the 20th Century. The spin off opportunities and supply chain linkages that lithium-ion battery manufacturing will provide make it no less strategic from the standpoint of economic development than AI or 5G. Companies and countries that do not to compete in lithium-ion battery cell manufacturing will miss huge opportunities for job and wealth creation in the coming century.
The challenge that Tesla has decided to undertake in manufacturing lithium-ion batteries at scale is daunting. Success is in no way guaranteed. Tesla’s core competence is not electrochemistry. It is unclear how much know-how Tesla has actually acquired from Panasonic since it started manufacturing battery cells at the Nevada Gigafactory in 2016. Manufacturing lithium-ion battery cells at mass scale is an extraordinarily complex business. But Tesla can take some comfort from the fact that CATL in China went effectively from nothing to being the largest lithium-ion battery company in the world in little more than five years.
NAATBatt has been calling for years for the creation of lithium-ion battery manufacturing champions in North America. Domestic champions are critical to the development of a robust domestic supply chain for lithium-ion technology. They are also critical to the continued support of lithium-ion R&D in the United States, a traditional strength of the American research institutions that may be waning.
The question is whether Tesla is up to the challenge of being a national champion. To date Tesla has been extraordinarily successful in moving its stock price to eye-popping levels. It has mastered the game of being a Silicon Valley start-up. If that is its only goal, it may continue to know that kind of success for a while.
I hope that Tesla’s ambitions, and Elon Musk’s vision of his legacy, are bigger than that. North America needs a champion in lithium-ion technology. It needs a champion that can help create jobs and economic opportunities at the hundreds of other companies that will be benefit if lithium-ion battery manufacturing can find a vibrant home in North America. This no small thing.
To become the lithium-ion battery manufacturing technology champion of North America, Tesla need to step up from being an introverted start-up and focus on a larger social and economic development role. This would be a change but not a novel transition for a successful, industry-leading business. Companies such as General Motors and McDonalds did the same sort of thing during the 20th Century. It will be interesting to see whether Tesla has the appetite to do the same.