On April 7, 2025, Tesla announced that the cost of 4680 battery cells produced at its Gigafactory in Texas has been lower than that of external suppliers, marking an important breakthrough in battery manufacturing. This development not only enhances Tesla's competitiveness in the electric vehicle market, but may also trigger a new round of price wars within the industry.
1. 4680 battery technology innovation and cost advantage
Tesla first released the 4680 battery in 2020, which is a cylindrical battery with a diameter of 46 mm and a height of 80 mm. Compared with the previous 2170 battery, the 4680 battery has a significant improvement in energy density and power output. In addition, Tesla has introduced a electrodeless design and a dry electrode manufacturing process, which has further improved production efficiency and reduced costs.
The dry electrode manufacturing process reduces energy consumption and production time by eliminating the solvent coating and drying steps in the traditional wet process, thereby reducing production costs. Tesla's goal is to reduce the cost of battery production by up to 50% through this process, which has important implications for the popularization of electric vehicles.
Pictured: Tesla has announced that the cost of its 4680 battery cells produced at Gigafactory Texas has been lower than that of an external supplier
2. In-house production over suppliers: Tesla's strategic achievement
Tesla's battery manufacturing team at Gigafactory Texas has achieved its goal of lower cost per kilowatt-hour than external suppliers. This achievement is due to Tesla's continuous innovation in production technology and the improvement of large-scale production capacity.
Up to now, Tesla has produced more than 100 million 4680 batteries, showing its rapid growth in battery production scale. This increase in production capacity allows Tesla to better control its supply chain and reduce its dependence on external suppliers.
3. Supply chain integration and vertical integration strategies
Through its vertical integration strategy, Tesla covers the entire industry chain from raw material procurement to battery production to vehicle manufacturing. This integration not only improves production efficiency, but also enhances the stability and cost control of the supply chain.
Tesla, for example, acquired lithium resources in Nevada, securing the supply of key raw materials needed for battery production. In addition, Tesla is also actively developing cobalt-free battery technology to reduce its reliance on rare materials and further reduce costs.
4. Intensified competition in the electric vehicle market and price war expectations
Tesla's advantage in battery cost could trigger a new round of price competition in the EV market. Lower production costs give Tesla the ability to launch new models at more competitive prices, further expanding its market share.
Tesla plans to launch an affordable electric vehicle priced at about $25,000 in the next few years, a plan that benefits from lower battery costs. The move could force other EV makers to adjust their pricing strategies in response to the competitive pressures posed by Tesla.
5. Industry impact and future outlook
Tesla's breakthrough in 4680 battery technology and production cost has had a profound impact on the entire electric vehicle industry. Other battery manufacturers, such as Panasonic and LG Energy Solutions, are also stepping up R&D and production of 4680 batteries to remain competitive.
In addition, Tesla's dry electrode manufacturing process has also attracted industry attention. LG Energy Solutions estimates that its unique dry electrode process can reduce battery manufacturing costs by 17 to 30 percent. This suggests that the dry process could become a mainstream trend in battery production in the future.
6. Conclusion
Tesla's success in in-house production of 4680 batteries and cost control has further strengthened its leading position in the electric vehicle market. Through technological innovation and supply chain integration, Tesla has not only achieved a reduction in production costs, but also laid the foundation for the popularization of electric vehicles and changes in the market competition pattern in the future.
As Tesla continues to make breakthroughs in battery technology, the EV industry is expected to usher in faster development and wider market acceptance.
