Tesla appears to be holding back from embracing solid-state batteries, a trend hinted at by signals received from CATL and Panasonic.
Tesla, the leading electric vehicle (EV) manufacturer, is not rushing to adopt solid-state batteries in its cars, as the technology is still years away from mass adoption and expensive to produce at scale for large EV battery packs.
Tesla's two largest battery suppliers, Panasonic and CATL, have expressed skepticism about solid-state batteries being a near-term gamechanger for cars. Instead, Tesla is focusing on incrementally improving existing lithium-ion battery technology.
The real battlegrounds in the EV market are faster charging and lower production costs. Tesla is addressing these challenges through advancements like high-nickel cathodes and tabless 4680 cells, which increase energy density and lower production costs.
Moreover, emerging silicon-anode battery upgrades for Tesla could add 20% more capacity without overhauling production lines. This means more range, faster charging, and lower cost per mile in Tesla vehicles.
Tesla is also collaborating with suppliers such as Panasonic on next-generation lithium-ion and solid-state battery research, aiming to improve energy density and reduce reliance on critical minerals. Additionally, the company is securing raw materials, boosting recycling initiatives, and investing in vertical integration to support cost reductions and sustainability.
Despite the promise of solid-state batteries offering double the range, lightning-fast charging, and improved safety, the real-world challenges in manufacturing these batteries for EVs are substantial. The underlying need for more range, faster charging, and lower cost per mile in Tesla vehicles doesn't require waiting on solid-state technology.
CATL projects that large-scale EV-ready solid-state production might be possible by 2027. However, the timing and affordability of solid-state technology will determine when Tesla adopts it. Until then, Tesla is focusing on lithium-ion battery improvements for its models, such as higher-nickel cathodes, structural battery packs, and other enhancements.
In summary, Tesla views solid-state batteries as promising but not yet commercially viable for their large automotive battery packs. The company prioritizes scaling proven lithium-ion improvements while continuing R&D exploration with partners. The average EV driver covers less than 40 miles a day, making ultra-long range a "nice to have" rather than a "must have" for most buyers. Therefore, Tesla's focus on lithium-ion battery improvements for its models is starting to yield tangible benefits, such as increased energy density and lower production costs.
Tesla's focus on lithium-ion battery improvements aligns with the finance sector's interest in investments that deliver tangible benefits and lower costs in the short term. Meanwhile, the technology industry eagerly awaits the commercial success of solid-state batteries, with their potential to offer double the range and faster charging, but acknowledges their years-long development timeline and high production costs.
