Is One of Tesla's Key Battery Innovations Worth It?
In 2020, Tesla CEO Elon Musk promised to completely rework his processes and release a cheap electric vehicle for the masses. That sent rivals scurrying, especially to keep up with his vow to stop making batteries “wet,” the expensive conventional way, requiring toxic solvents, massive drying ovens and cavernous factories. Instead, Tesla would use a new “dry” process that, along with other innovations, would halve its battery costs. That could mean a significant reduction in the price of EVs and real profits for automakers.
Five years later, Tesla’s cheap car is nowhere to be seen, and neither are dry batteries. In China, the U.S., South Korea and elsewhere, the industry’s best large-scale battery manufacturers continue to use the wet methods invented more than three decades ago.
The main reason the industry is clinging to its old wet ways is that no one has yet figured out how to produce batteries at lightning speed—Tesla’s Nevada factory pumps out 70 cylindrical battery cells a second—without any liquid to hold it all together.
But industry doubts have also crept in about Musk’s original claim that dry processing would dramatically reduce the cost of producing batteries, by far the most expensive single parts in an EV. Dry processing definitely pares costs, since you don’t pay for solvents, and the method incurs lower electricity bills. But the cost of new equipment largely overtakes those savings, according to industry experts and people familiar with the situation at Western EV and battery makers.
The savings would be bigger in any new gigafactory built from scratch, but the use of dry processing equipment would make its most substantial impact when combined with other battery innovations Musk proposed like the larger 4680 battery. Dry processing alone would “not be a game changer” and would not allow Western battery makers to match the low costs achieved by dominant Chinese producers, said one of the people familiar with the situation.
“I think once it’s in place and the gains are real but incremental, folks will wonder, ‘Why did we talk about it so much?’” said another of the people.
Despite the skepticism swirling around the technology, there is a massive global rivalry to develop it at scale. For more than a year, for instance, Tesla has been locked in a lawsuit with Matthews International, a Pittsburgh, Penn., company that manufactured most of Tesla’s dry processing equipment.
In February, an arbitrator ruled against Tesla’s claim that Matthews had violated Tesla’s patents by selling the equipment to other companies. But Tesla is now seeking to vacate the ruling and to reverse a key Matthews patent.
On Tesla Battery Day in September 2020, when Musk introduced the idea of dry batteries, he was talking about the electrodes—the cathode and anode, the most expensive components of a battery.
Announcing the dry idea alongside Musk in 2020, Drew Baglino, then Tesla’s senior vice president of powertrain and energy engineering, said the new method would change everything. Using dry processing, you would achieve “a 10 times reduction in [factory] footprint, a 10 times reduction in energy and a massive reduction in investment,” he said. Musk said the innovation, if extended across all Tesla EVs, would save the company $1 billion a year.
From the start, Tesla workers had trouble making cathodes the dry way. Without solvents, the cathode powder crumbled like cake mix without milk or butter, making it hard to coat it uniformly on the aluminum substrate.
Four years later—in July 2024—Cole Otto, a senior Tesla engineer, posted a photo on LinkedIn of what he said was the first Cybertruck outfitted with an entirely dry 4680. And in March this year, Bonne Eggleston, senior director of the 4680 program, told me he expected all Cybertrucks to be using dry batteries later in 2025.
The company has said nothing more about its dry battery plans since. Neither Eggleston nor Otto responded to messages.
Other companies battling to get dry electrodes into EVs include PowerCo, Volkswagen’s battery-making arm; South Korea’s LG Energy Solution, General Motors’ main battery supplier; and China’s Lead Intelligent Equipment, a battery equipment maker in Wuxi.
“What we realize is that the dry coating process race has begun,” said Moshiel Biton, CEO of Israel’s Addionics. Biton said his company is supplying advanced battery foils to multiple dry processing developers.
None of these companies has said whether its dry equipment is ready for prime time, nor what it costs. Even though dry processing eliminates some expensive manufacturing steps, the specialized equipment it requires is costly, especially now in its nascent stages of adoption, according to BloombergNEF, a renewable energy research firm.
In an earnings call with analysts on Aug. 6, Matthews CEO Joe Bartolacci said the company had signed a binding contract for a production line with a small developer of solid-state batteries. But he did not disclose the name of the customer nor whether the Matthews equipment could operate at fast speeds with a low defect rate.
Industry experts told me that if Tesla or other battery makers can work the bugs out of fast dry processing, the method is likely to be used in future battery plants, since that is where costs could be saved once it is scaled up. In the West, that could be a long wait, since EV sales are growing slowly, and there already is a considerable surplus of battery production capacity.
But Iola Hughes, head of research at Rho Motion, a battery research firm, thinks some new factories using dry methods will emerge by 2028, presuming someone figures out how to make cells fast.
