Tesla reported that the 4680 batteries grew 80% in Q2 versus Q1. This was from one production line in Texas and the California test line. Tesla reported 10 million cells were made in Texas from the start of production to June. This was 0.86 GWh of cells. The growth of 4680 battery cells was mainly from the Texas line. If the Texas line made 0.5 GWh of cells in Q2 (as there was continued growth in July) then Texas would need three quarterly doublings to reach 4 GWH per quarter (aka 16 GWH/year). This would be near the 6.25 GWH per quarter in the 25 GWH per year plan.
Tesla will have most of the problems worked out in the 4680 production line. They have nearly completed three other production lines. It will take 9-12 months to ramp the new lines as well but it would be less time than the first line because problems have been resolved. Growth of 4680 batteries would not be just from one line and a test line, it will be from all four Texas lines, Berlin lines, Nevada lines and China lines.
The cost of the 4680s has been reduced by 25% in Q2 versus Q1. The energy density has been increased 10% so that they match the 2170 cells before considering structural battery pack weight reduction. The energy density will be further increased with more silicon in the anode and other known battery chemistry modifications.
Every 100 GWh of batteries lets Tesla make $30-60 billion per year product.
Megapack margins were 18% but that was on $413 per MWH. This is still the old $1.6 million per megapack pricing. Tesla increased pricing to $2.1 to 2.5 million for each 3.9 MWh megapack last year, but there was a long backlog of orders. Megapack sales at $500-600 per MWH and costs at $300-320 per MWH will give Tesla 40-50% margins. If Tesla lowers Megapack prices later they should still maintain 30-40% margins longer term.
Tesla only had one of two production lines operating for Megapack. This was why they had only ramped to 3.7-3.9 GWH out of the planned 5 GWh per quarter for one line. The second line will let them scale to 10 GWH per quarter. There is also a long delay in recognizing revenue for each Megapack as they have to delivered, installed, activated, connected and certified by the power companies. This is a slower process in parts of the USA. Tesla will trend towards $5B per quarter from the existing Megapack factory with both lines and the double that next year with the new China Megapack factory. A 30% margin would mean $1.5 billion per quarter from one Megapack factory with two lines and $3 billion from two fully operating plants.
China is far faster to build new factories and get them scaled and China’s power companies are faster to install infrastructure. This will make the ramp and revenue recognition far faster for the China megapack factory.
Tesla’s Masterplan part 3 indicates there is global demand for 600,000 Megapacks per year or the production of 60 Megapack factories. It only costs Tesla $400 million to build each new Megapack factory.
Tesla will be installing Megapack’s at new larger charging stations to support Cybertrucks and Semis and the increased electric car fleets. Tesla has 50000 chargers at 5000 stations. Megapacks that Tesla installs will allow Tesla to capture tax credits for about 30-60% of the cost of the fixed storage.
Want to see the nicest and most stupidly bullish table ever?
Tesla energy ASP per MWh storage increased QoQ from $393k to $413k…and energy cost per MWh storage DECREASED from $349k to $336k QoQ.
This explains the 11% margin to 18.4% move QoQ.
But what happens next?
A shit… pic.twitter.com/vg7qNv4C6k
— James Cat (@TSLAFanMtl) July 19, 2023
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
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