Tesla unveils new technology at Battery Day, ASX battery stocks rejoice

Tesla battery day electric vehicle EV 2020 cobalt lithium nickel cathode
Tesla’s Battery Day announcements include the planned phase out of cobalt, a more efficient “tabless” cell and a goal to build a US$25,000 electric car.

Electric vehicle manufacturing giant Tesla has updated the world on its progress in battery technologies at its highly anticipated Battery Day investor event on Tuesday.

The unique drive-in event was held at the company’s Fremont manufacturing facility in California, United States, with Tesla chief executive officer Elon Musk presenting to socially-distanced shareholders in parked cars, who honked horns in response to the presentation.

Major announcements from the event included Tesla’s move to eliminate the controversial use of cobalt in its cathodes, a new cathode plant to streamline battery production in the US and an ambitious goal to build a US$25,000 (A$35,000) electric car using new “tabless” battery cells.

Cobalt phase out

Speaking at the event, Mr Musk said while the company already uses less cobalt in its existing batteries than others in its industry, Tesla plans to eliminate its use altogether.

Not only is cobalt expensive and difficult to extract, it has the reputation of being unethically mined in the Democratic Republic of Congo, where human rights violations including child labour practices are prevalent.

The company has previously said it would seek to reduce its reliance on cobalt but, on the contrary, it only recently signed a large-scale cobalt supply deal with Glencore in June with a condition that the miner ensure all of its cobalt was ethically produced.

Mr Musk didn’t reveal an exact timeline for the phase out but said the move will make Tesla batteries significantly cheaper.

“It’s absolutely critical that we make cars that people can actually afford,” he said.

$25,000 car goal

Hence, Tesla announced its ambitions to build an electric vehicle at an entry-level price of US$25,000 (A$35,000).

The company intends to achieve the goal through the use of its new “tabless” battery cells, as well as changing the materials inside the cell, which combined are expected to “halve” the price per kilowatt hour and bring other benefits in performance and range.

Named 4860 cells, these new batteries will work as the term suggests: Tesla will remove the tab that connects the cell with what it is powering. They are expected to be six times more powerful with a 16% increased range.

The name comes from the cells’ measurements – 46mm by 80mm – which is bigger than Tesla’s current cells.

“You actually have a shorter path length in a large tabless cell than you have in the smaller cell with tabs… So, even though the cell is bigger, it actually has more power,” Mr Musk said.

The batteries will be produced in-house, another cost-cutting strategy that Mr Musk said will bring the sale price of Tesla EVs closer to petrol-powered cars.

Mr Musk first promised a $25,000 electric vehicle in 2018 and said it would be possible within three years, so the plan appears to be on track.

New cathode plant

Mr Musk also said Tesla will build a new cathode plant in North America as part of its plan to shave supply chain costs and streamline battery production.

He did not reveal the location of the plant, but the company announced in July that it would build its next US factory in Austin, Texas. Tulsa in Oklahoma has also been named as a strongly consideration for future projects.

The company also plans to make improvements to its process so it does not produce wastewater and cathodes could be made 76% cheaper.

Also speaking at the Battery Day event, Tesla senior vice president of powertrain and energy engineering Drew Baglino said the facility will “leverage all of the North American resources that exist for nickel and lithium”.

“Just localising our cathode supply chain and production, we can reduce miles travelled by all the materials that end up in the cathode by 80%,” he said.

Mr Baglino said increasing the use of nickel in its cathode battery production was a goal for Tesla as it is “the cheapest and highest energy density metal”.

Mr Musk also revealed Tesla has secured the rights to a 10,000-acre lithium clay deposit in Nevada, another move that will lower the cost of batteries and bring Tesla’s supply chain closer to home.

New high-performance Model S Plaid to be available next year

Another exciting revelation at Battery Day was the new Plaid powertrain for Tesla’s Model S sedan, which will have a range between charges of 520 miles (836km) and can get from zero to 60 miles per hour (96km/h) in just two seconds.

It can reach a top speed of 200 mph (322km/h) but will have a top price to boot at US$139,990 (A$196,325).

The Plaid model will be available in late 2021.

ASX small cap stocks welcome the battery revolution

Mr Baglino’s comments about the new cathode plant and its US-sourced feedstock would have certainly excited lithium and nickel producers in the US, and it’s no surprise that US electric vehicle companies would look to source a local supply of raw material given ongoing supply issues and the global pandemic.

Lithium-ion battery materials and testing pioneer Novonix (ASX: NVX) responded positively to topics covered at Battery Day in an announcement on Wednesday.

Novonix chief executive officer Dr Chris Burns said Tesla’s approach to rethinking battery cell manufacturing “exactly aligns” with his company’s approach to rethinking battery materials manufacturing.

“The cost of production of cells and materials has been stuck on existing technology and there is opportunity to disrupt these sectors through re-engineered solutions,” he said.

“Novonix’s anode material processing technology is one example of delivering lower cost, high performance graphite to support long cycle life applications, and Dry Particle Microgranulation (DPMG) is another, as a process to eliminate wastewater and use simpler metal inputs to reduce cathode manufacturing cost or improve yield in anode manufacturing.”

“As Novonix has continually asserted, it is clear that high nickel cathode materials will play a key role in the growth of the battery sector and lower cost, advanced manufacturing methods, such as DPMG, are well positioned to support the industry’s required growth and cost-efficiencies,” Dr Burns added.

Novonix is currently developing ‘million mile’ vehicle battery technologies with revolutionary anode and cathode materials, and designs, manufactures and sells battery testing equipment to major companies including Panasonic (which supplies to Tesla), Samsung, Honda, CATL, SK Innovation, Dyson and Apple.

Last month Lake Resources (ASX: LKE), which develops high purity lithium from its flagship Kachi project and has three other lithium brine projects in Argentina, announced an agreement with Novonix to provide lithium carbonate to the latter to produce NMC622-based lithium-ion battery cells.

“With EV makers accelerating their production plans, high-purity and responsibly sourced lithium is in increasingly short supply globally. We look forward to expediting the results from Novonix and providing samples to potential offtake partners as soon as possible,” Lake managing director Steve Promnitz said in August.

Meanwhile, graphite company EcoGraf (ASX: EGR) presented at Benchmark Minerals’ Battery Day – an event that enabled smaller clean energy companies opportunity to present their work in response to Tesla’s Battery Day.

EcoGraf showcased plans for its 20,000 tonnes-per-annum processing facility in Western Australia – expected to be the first commercial graphite purification plant outside of China and projected to cost about $101 million to build up to its full 20,000tpa capacity.

It also highlighted positive initial results that demonstrated the EcoGraf purification process could be used to recover high purity carbon anode material from recycled lithium-ion batteries, and noted funding support it has received from the Australian government.

EcoGraf said the EV market is forecast to drive more than 700% growth in natural graphite demand by 2025 and is anticipated to dominate battery mineral demand to 2050 (followed by nickel).

Piedmont Lithium (ASX: PLL) is another ASX small cap that could benefit from an increased interest in sourcing US-based battery materials.

The company aims to become one of the world’s few lithium hydroxide producers outside China, with one North Carolina-based facility and in active pursuit of a second site.

Piedmont president and chief executive officer Keith Phillips said last month its North Carolina plant would provide a superior logistic route for spodumene from Canada, Brazil, Western Europe and Western Africa.

“Our location provides a low-operating-cost advantage with a potential 98% reduction in the supply chain route length from mine to EV,” he added.

Piedmont’s shares surged before being placed in a trading halt last week. The stock was suspended from trading on Tuesday pending the release of an announcement regarding a response to a price and volume query.

Tesla’s 2020 annual shareholder meeting and Battery Day

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