Why Tesla's Battery Investors Day was Delayed

That's absolutely what's going on with Battery Day. There have been hundreds of videos about Battery Day, some of them comical, some of them sincere but errant, and some of them are pretty good. But it begs the question, Elon Musk delighted Tesla fanboys such as me with an autonomous driving day.

Where he did a deep dive into what they were doing in autonomous driving. I remain a skeptic in that area. But if anybody can do it, he could.

And it's not my job to piss on other's dreams. I'm loving to succeed. Having looked inside software and had Microsoft Word crash the other day and I lost a bunch of work.

This program has been out there for 28 years and it still didn't work. I'm not hopeful. But the investor day had a lot of information and was extremely well received by an analyst and by Tesla fanboys.

So we did all in unison get quite breathy about Tesla Battery Day, Battery Investor Day. And nearly a year ago, Elon Musk started talking about it. And it was kind of hard scheduled for March.

And March came and went. And everybody thought April. But he came out and announced it would be in May.

And May came and went. And no Battery Day. And then June came and went.

While we're at the 20th of June, we still don't have a Battery Day. And Musk said it would definitely be sometime in June. So we're kind of fixed in space.

Everybody waiting for Battery Day. Let's talk a little bit about the reality of the battery improvements. Musk said several years ago, he was shooting for a 30% improvement in energy density.

Now there's been no big breakthrough. But there's been a lot of incremental improvements. Battery manufacturer is a series of minor optimizations that cumulatively can improve a battery quite a bit.

And then there were some special targets of opportunity. One of them was the acquisition of Maxwell technology. And that sort of changes the whole optimization function.

Because suddenly you have new variables. How much polymer to include in the cathode mixture? What polymer size? What cathode material size? How much carbon do you need with this new fixative to provide conductivity? A whole lot of things. And then there's the anode side.

Which has been for some time a mixture of graphite and silicon. And how does that interact with the SCI layer? Jeffrey Dahn announced a thing that I'll give him full credit for. But the previous week, there was a rush to publish among at least four or five entities in the United States.

I can't sort out who was first to discover that ethylene carbonate, EC, which is one of the biggest components of the organic solvents used to suspend the LiPF6 electrolyte, was the main culprit to battery degradation. The reason nobody looked at this was it was also the main constituent of the solid electrolyte interface layer, which covers the anode with kind of a rubbery vinyl-like deposit that kind of holds the anode together and prolongs battery life. So who would have thought that it was the main constituent in degrading battery life? But it turns out it was.

Cattle is trying to ride the wave of promotion over Tesla's million mile battery. Cattle makes a lithium-ion phosphate battery that already had three or four times the life of an NCA battery. All they had to do was remove the EC, still get the battery to work, and they got a million mile battery too.

But it hadn't got anything to do with Tesla other than Tesla is buying their batteries. Jeffrey Dahn, conversely, has worked on not a new chemistry, but a new electrolyte chemistry that uses two completely different organic solvents and does not use EC. But it also has some exotic features like a much larger cathode crystal size and a few other tweaks that optimize the battery.

The bottom line is the concept of a battery that will do three or four times the life of Tesla's current battery, a 30 percent improvement in energy density, which means basically a 400 mile Model 3 is in the bag. Elon Musk is interested in all that, but his problem that's been keeping him awake nights is what if people continue to buy the Model 3 and then start buying a bunch of Model Ys too? And then we got to make the semi-truck, which takes enough batteries to make four or five Model Ys. So basically what he knows, and you don't know, is that he needs a terawatt of batteries right now, terawatt hour.

Now when he announced the first Gigafactory, he was putting a stick in the sand saying the preposterous thing that by the time it was in full production, it would produce 50 gigawatt hours of batteries per year. Well, nobody believed that because if it was true, it would double the world's production of lithium ionic batteries of all kinds. It would double the production of lithium batteries of all kinds.

You know what? He kind of did it. I don't think they're quite at 50 gigawatt hours. As publicly proclaimed, but they may be.

And therein lies the tale. So the battery thing is very interesting to Elon Musk, to all the Tesla fanboys, and all stock analysts everywhere. It will show how far ahead Tesla is ahead of everybody else in battery technology.

That's cool, but it's a little problematic. So why did we miss March, and we miss April, and we miss May, and we miss most of June? When is battery day going to be? And why was it delayed? He's actually a little further along on batteries than you think. He's doing very well manufacturing a lot of batteries, and they're performing extremely well.

He kind of has to have it up running fully and completely before he can tell you about it. And all you have to do is think about this a minute. If he announces it has battery day, and announces a battery that will turn a 300 mile Model 3 into a 400 mile Model 3, and the battery will last four times as long.

But it won't be available for three months. And you're buying a Model 3 right now. Actually, I'm picking up a Model Y Monday, the 22nd of June.

So it would be just a mile up, that battery day will be on the 23rd. And here's why. If you're going to buy a Model 3 right now, or you could wait three months, and buy the good Model 3 with the good battery, would you wait three months? Two months? One month? Six months? His existing very substantial Model 3 sales, and his existing very substantial Model Y sales terminate on the battery day presentation.

From that presentation on, they sell zero Model 3s, and zero Model Ys, because everybody wants the good battery. Don't you? And so, this is called officially the Osborne effect. It derives from a computer company with a very successful personal computer that looked like a portable sewing machine.

And people loved it, and they were buying them by the thousands. So they announced a new, better one with an amber screen, bigger disk drives, more memory, ran faster. But they weren't ready to produce them.

It took them, they said, six months. It took more like a year before they had them to sell. In the meantime, the sales of the existing model cratered to zero.

The company actually went bankrupt. And it's the casebook study for the Osborne effect today. That was in 1984.

That was 36 years ago. Is that right? Six, 10, 16, 26, 36 years ago. There are CEOs of high-tech companies today that weren't even born then, and have never seen a photograph of an Osborne computer.

But they're keenly aware of the Osborne effect. So how can Elon Musk have a battery investor day showing and describing a new advanced battery that they will have in the cars by a date certain? And expect to sell anything, any car at all, prior to that date. And in that gap, he has no income, no revenues.

So we're not going to have battery investor day until Elon Musk is already putting the batteries in the Model 3 and the Model Y. And part of battery investor day is going to be culminated by a surprise announcement. That they've already been putting these batteries in for the last month. And everybody that has the battery, bought a car in the last month, already has the battery.

And it'll be increased range and so forth will be turned on by software update this coming weekend. That's the only way you can introduce a new battery that's imminent at all, like within the next year, without totally killing the sales of his current cars. I mean, look at yourself.

You've got an order in, you're going to get a delivery date for next week. Or you can wait a month and get the same car at the same price. Actually, it doesn't matter if it's a bigger price, nobody will care.

In 30 days, you get the good battery. And without the 30 days, you get the stupid battery. The old battery, which are great, but you don't care.

You want the latest and greatest. So whether that delay is 30 days, 60 days, 90 days, it actually doesn't matter. You're going to cancel your order and wait for the good one.

But there's only one guy in the entire United States, knowing this, would still go pick up his Model Y on Monday. This guy. But I'm not like you.

So, that's the reason for the delay. Much of the announcement is not actually going to be about how improved the battery is, but how the costs have plummeted. The acquisition of Maxwell capacitors allows them to turn up the line where they print the materials on both sides of the aluminum or copper as much as six or eight times because they don't have the drying ovens.

I've heard it said very highly toxic. They're not highly toxic. They're toxic like paint thinner is toxic.

It's kind of the same thing. It's a voluble solvent that the EPA classifies as toxic. But you use around the house all the time lacquer thinner that has stone.

That kind of toxic. But it is toxic. And they have to have a big ugly machine to recover, to distill those vapors and keep them from being released into the air.

And that drying oven seriously slows production. Tesla has a new patent that eliminates the tab from the jelly roll that has to be soldered to the cathode cap. I watched the most hilarious presentation by one Tesla YouTuber, who I really kind of like.

He does good stuff, but he just goes off in his own mind with what makes sense. And he led a whole passionate description of how many angels can dance on one tab, and what cooling improvement you get, and what conduction conductivity improvement you get. They had read the patent and you list every possible benefit of the patent in kind of patent talk.

It's its own language. You say things a certain way to cover every possible aspect of an improvement. The improvement is this.

When they put the jelly roll in the steel enclosure, the steel enclosure is already in contact with the anode at the surface. But the cathode has this tab, a little bit of aluminum foil that sticks up. And then they have to solder that, I say stotter, but probably ultrasonically weld that tab to the actual cathode steel that's in the cap.

And then separately, they have to place the cap robotically on the enclosure and crimp it so it seals real tight. Actually, before that, they add a dropper full of electrolyte. It's just squirted in there.

It's like a medicine dropper in a mount. And then they crimp the cap on. And that is an error-prone, slow, relatively speaking, process that slows the assembly on.

So what Tesla came up with was a capsule that embeds in the bottom and the top of the jelly roll and connects it directly to that cap without any ultrasonic welding. What does that do? It's like making the assembly of lithium batteries very much akin to the process of manufacturing 14-gauge shotgun shells, maybe 16-gauge shotgun shells, which, of course, is a faster process. Here down the line comes your can, in goes the capsule, in goes the jelly roll, in goes the capsule, on crimps the cap.

I always forget about that solvent, don't I? So in goes the capsule, in goes the jelly roll, in goes a dropper of electrolyte, in goes the top button or cap and pellet, and then on goes the cap that's crimped. And it makes manufacturing so much faster. So when you're trying to decrease the cost of the battery, there's really a zone beyond which you may not go, and that's the cost of the nickel and the graphite.

I know you all think the big deal in battery production is lithium and cobalt. I can tell it to you over and over, and I can tell it to you in many ways. It isn't.

It isn't a factor at all. The cost of the materials in the battery, and in fact, the battery Elon Musk himself said should be called the nickel graphite battery. That's what it is.

The rest of it is seasoning. I like to use this five pepper spice from India called, what's it called? Curry. I put curry on frosted flakes.

I put curry on everything. It's white pepper, coriander, cumin, a mixture of basically peppers. And I love it, but I don't put very much on anything.

It's just a flavor enhancer, a spice. And that's what all you're worried about. That's what it is.

It's nickel and graphite. But there's a long way to go to get the cost of making batteries down to nickel and graphite. And it's almost all the assembly process.

And I think Tesla has made some enormous strides in speeding up that process. Now at the same time, understand he needs a terawatt hour batteries. There's no problem with the relationship between Tesla and Panasonic.

There never was about batteries. A little tweak about Rochester, New York, but so were panels. But the batteries, there's never been a conflict.

They just signed a two year renewal of their supply contract with Panasonic for Nevada. They've also done new contracts with CATL and LG Chem and begins with an S. It'll come to mind sometime tomorrow. Samsung, yeah.

And so they're buying batteries from everybody that will obligate to deliver. But a big part of their production in the future, certainly for the cars, it's going to be their own assembly lines, which they already have I believe in operation in Fremont and soon or maybe now in Sparks, Nevada. And the reason he keeps putting off battery day is he actually needs to be manufacturing cars with the batteries before he tells you about it or you're all quick buying his cars until he can do it.

Unless he can have a battery day where he says, within five years, we'll have this. No, no, no, no, no. That's not what this is about.

And so because of the Osborne effect, he has to keep delaying. This is not because of COVID-19. It's not because Trump's holding a rally.

It's not because Black Lives Matter. It's not any of those things. It's the Osborne effect.

And he has to be either already producing or ready to punch the button before he can have the discussion with you about that. And so that's my take on battery day. While you're here, solid state batteries, sure.

We can talk about that. Maria Berra's work with John Goodenough. There's all kinds of blue sky out there.

It's off in the future. And Tesla will be a part of it. Understand, they're not just the largest producer of batteries in the world.

They're the largest consumer of batteries in the world. And nobody is going to introduce any improvement to lithium batteries. They're not ever going to announce it before they show it to Tesla first.

It's just the way markets and business work. They will get the pick of the crop of any battery technology sufficiently mature to be demonstrated, rather than talked about with a PowerPoint presentation. And so, and there will be plenty of people with PowerPoint presentations, very disappointed to not get in to talk to them anyway.

So that's my take on the battery day, what it will encompass, and when it will occur. And that is, and it could happen this week. He has said June, but he missed March, April, and May consecutively.

And he made everybody doing YouTube videos, touting those dates, look stupid in doing so. So I think there must have been a good reason. And I believe I figured out what the reason was.