Tesla’s Reduced Risk Supply Chains: Chinese Component Contribution to 4680 Battery Cells Approaching Zero

This article does not constitute investment advice, and the author holds no positions in the mentioned stocks.

The Shifting Landscape of Tesla’s Supply Chain

Tesla continues to set the standard for automakers striving for resilient supply chains. Recent insights from Piper Sandler reinforce this perspective, particularly through analyst Alexander Potter’s remarks on Tesla’s decreasing dependence on China for its innovative 4680 battery cells.

Understanding the 4680 Battery Technology

For those unfamiliar, Tesla’s 4680 battery cells are cylindrical with a diameter of 46mm and a height of 80mm. These advanced cells boast a tabless design, which allows electrodes to extend across the entire perimeter of the cell. This innovative feature minimizes current concentration, enhances thermal management, and ultimately leads to improved energy density along with reduced manufacturing costs.

Piper Sandler’s Insights

In his recent analysis, Potter emphasizes that “Tesla is the only car company that is trying to source batteries, at scale, without relying on China.”He highlights the significant progress Tesla has made in diversifying its supply chain:

“In fact, for in-house ‘4680’ batteries, China reliance is already approaching 0%.”

It’s important to note that Panasonic remains a vital partner in the production of Tesla’s 4680 cells. However, Tesla is actively pursuing the localization of a portion of production at Giga Nevada through its ambitious $3.6 billion plant expansion.

The Road Ahead for Tesla’s Manufacturing Capabilities

Potter further asserts that Tesla aims to achieve complete autonomy over its battery production processes. This includes manufacturing its own cathode active materials (CAM), refining lithium, producing anodes, coating electrodes, assembling cells, and ultimately selling its vehicles.

He points out that no other American company can “make similar claims”regarding such comprehensive control over their battery supply chains.

While acknowledging that short-term vulnerabilities to international supply issues remain, Potter appreciates Tesla’s forward-thinking initiatives toward supply chain resilience.

Anticipating Significant Developments

As these developments unfold, Tesla investors are particularly focused on the upcoming week. The company is poised to unveil its unsupervised Full Self-Driving (FSD) capabilities in the Model Y in Austin, Texas. This launch is expected to coincide with the introduction of 10 to 20 robotaxis, with plans to extend this service to various U. S.cities by the end of 2025.

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