Elon Musk: Tesla is like the 'Baskin Robbins of batteries'

A major Tesla milestone was announced yesterday — the all-electric automaker just surpassed over $1 Billion in GAAP net income. But that doesn't mean it's time for complacency. During Tesla's Q2 earnings conference call, CEO Elon Musk said, "If you look at history, often, the seeds of defeat are sown on the day of victory. We will endeavor not to make that the case at Tesla."

Above: Tesla CEO Elon Musk (Flickr: Web Summit)

With its towering market value, how can Tesla stay in pole position? While many tactical advancements were discussed, progress is accelerating rapidly with its innovative battery strategy. "We are making great progress on 4680 cells... and structural pack. From a physics standpoint, this is the best architecture, and from an economic standpoint, it is the lowest-cost way to go," explained Musk.

Senior Vice President of Powertrain and Energy Engineering, Drew Baglino, updated Tesla's progress: "we have successfully validated performance and the lifetime durability of the 4680 cells produced... and we're continuing ongoing verification of that reliability. We're actually accruing over one million equivalent miles on our cells that we produce every month."

To hedge against any supply chain issues downstream, Tesla is prepping to increase its access and volumes from its battery cell suppliers. "With our suppliers, we'll be able to deliver about twice as much cell output in next year as this year... the contracts that we have with cell suppliers call for roughly a doubling of cell supply to Tesla in 2022," explained Musk.

Tesla is looking at any (and all) possible supply chain chokepoints. Baglino added, "From a raw materials perspective, we offer long-term contracts to secure our supply chain [as well]... We're not just looking at the suppliers, but upstream from there."

Above: A quick recap of Tesla's Q2 earnings (YouTube: Reuters)

Musk explained that Tesla also has redundancies, contingencies, and backup plans in place to ensure battery supply and industry leadership. "So right now, we kind of have the Baskin Robbins of batteries situation, where there's so many formats and so many chemistries, that it's like we've got like 36 flavors of battery at this point."

That said, Musk noted, "It is going to be important to consolidate to maybe, ideally two form factors, maybe three, but ideally two. And then just one nickel chemistry and one iron chemistry, so we don't have to troubleshoot so many different variants."

Musk concluded, "I see us sort of like consolidating around a 4680 nickel-based structural pack for long-range vehicles. And then not necessarily a 4680 format, but some other format for iron-based cells."

So what happens when Tesla's state-of-the-art battery electric vehicles are combined with full self driving capabilities? Musk said, "The value of a fully electric autonomous fleet is generally gigantic, boggles the mind really... [it] will be one of the most valuable things that's ever done in the history of civilization."

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Source: Tesla