Analysts contend that Tesla is in the greatest position to achieve the same results for EV batteries after solving the EV production cost efficiency challenge and earning record profits per vehicle as a result. According to reports, its capital expenditures for producing 4680 cells are up to 70% lower than those of the top Korean or even Chinese battery manufacturers.
According to Morgan Stanley analyst Adam Jonas, Tesla would have 60%–70% lower capital expenditures to generate a GWh of battery capacity than the top Chinese and Korean battery companies thanks to the US$3.6 billion Nevada Gigafactory expansion it recently announced. Together with the government incentives for domestic battery production outlined in the Inflation Reduction Act, Tesla will be able to lower the cost of EV batteries just like it did for electric vehicles—that is, by producing them as efficiently as possible and reaping record profits.
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With the recently announced 100 GWh 4680 battery capacity expansion of the Nevada factory, Tesla will be generating US$3.5 billion per year simply from government subsidies, according to the Inflation Reduction Act, which includes an annual subsidy of US$35/kWh for made-in-USA batteries. Additionally, the US$35/kWh made-in-US battery subsidy might be increased by an additional US$10/kWh in tax credit for the entire pack as long as it is put together in the US. Elon Musk stated the following during the most recent investor meeting:
“At the end of last year, output of 4680 cells for batteries reached 1,000 cars per week, and as was stated at Giga Nevada yesterday, we are expanding 4680 cells’ capacity by an additional 100 gigawatt-hours. Our long-term objective is to develop well over 1,000 gigawatt-hours of internal cells and keep using the self-cell providers. So just to be clear, we’ll keep using other cell companies. Just that there is and will continue to be an almost limitless need for lithium ion batteries. Therefore, we believe we can grow much more quickly using both external suppliers and cells made in-house. And we have a fantastic idea to make the 4680 cell affordable and high in energy density.”
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The Model Y’s 4680 cell-to-chassis power system is already considerably less expensive to produce than the SUV’s standard Panasonic 2170 battery at roughly the same adjusted energy density, and Tesla-made cells appear destined to continue falling in price in the future, making its electric vehicles even more competitive. The Model Y is assembled at Giga Texas.