- 26th June 2019
- Posted by: Hakeem
- Categories: Innovation, Technology
- Tesla is developing the means to manufacture its own battery cells, current and recent employees told CNBC.
- The main cost component of an EV is its battery pack and battery cells, according to research by IHS Markit.
- Since 2014, Tesla has mostly relied on its partner Panasonic to produce battery cells for its vehicles and clean energy products.
Tesla is developing the means to manufacture its own battery cells, according to five current and recent employees, something that the electric vehicle maker has relied on Panasonic to do since the companies signed an extensive partnership deal in 2014.
The move could help Tesla offer cheaper, higher-performance electric vehicles than it does today, without having to pay or share data and resources with outside vendors or partners. The battery pack and battery cells are the main cost component in an electric vehicle, according to research by IHS Markit.
The company has been “battery-constrained” in the past, CEO Elon Musk acknowledged at the company’s annual shareholders meetingearlier in June. That means a lack of batteries limited Tesla’s production and sales of electric vehicles and energy storage systems (Powerwalls and Powerpacks).
Making its own battery cells would also fit with Musk’s general ambition to make Tesla as “vertically integrated” as possible, which means developing, manufacturing and selling everything it can — even its own enterprise software.
But manufacturing cells at high volume would be another challenge for a company that recently implemented cost-cutting measures and is still struggling to perfect its high-volume vehicle production.
Tesla and Panasonic did not respond to requests for comment.
Skunkworks lab on Kato road
Tesla employees conduct some of their battery cell manufacturing research at a “skunkworks lab” at the company’s Kato Road facility, a few minutes from its car plant in Fremont, California.
That plant is where Tesla makes its Model 3, Model S and Model X vehicles today, while its batteries are made at the Gigafactory in Sparks, Nevada, a factory jointly owned and operated with Panasonic.
Employees in Tesla’s battery R&D teams are now focused on designing and prototyping advanced lithium ion battery cells, as well as new equipment and processes that could allow Tesla to produce cells in high volumes, employees and former employees said.
Even if Tesla’s effort to start making battery cells is successful, the company is not likely to cut ties with Panasonic and other battery suppliers any time soon.
Tesla employees familiar with cell supplier negotiations said the company is most likely to work with Panasonic and LG to provide the cells that go into the initial Model 3 vehicles produced in its Shanghai factory. That factory could start production by the end of 2019, with mass production beginning in 2020.