Tesla Semi production on hold until company can make its own batteries

Tesla CEO Elon Musk said during the company’s earnings call that volume production of its class 8 truck, the Tesla Semi, is on hold until Tesla can make a high volume of its own 4680 battery cells.

The cells, which Tesla designed and showed off to shareholders at a battery day presentation in September 2020, are large, tab-less lithium-ion cells that the company is making at its pilot battery factory in Fremont, California. The company said in a Q4 earnings update that it will deliver its first Semi by the end of 2021.

“Prototypes are easy, scaling production is very hard,” the CEO lamented.

When Tesla first unveiled its Semi trucks in 2017, Musk said they would be delivered to customers in 2019. In April last year, the company said it would delay Semi production until this year.

Tesla has taken scores of reservations from big name customers for the Semi. Anheuser-Busch, DHL Group, PepsiCo, Pride Group and Walmart put money down for the class 8, battery electric Tesla trucks.

Tesla has also used Semi prototypes in a marketing stunt to deliver cars to customers. It recently posted job listings for employees to work on Semi truck production lines at its battery plant outside of Reno, Nevada.

Musk said of the Semi, specifically:

“The main reason we’ve not accelerated new products is — like for example Tesla Semi — is that we simply don’t have enough cells for it. If we were to make the Semi like right now, which we could easily go into production with the Semi, but we would not have enough cells for it right now. We will have enough cells for Semi when we are producing the Tesla 4680 in volume.”

“Basically we do not see any issues with creating a compelling long-range truck with batteries apart from cell supply,” Musk said.

Tesla President of Automotive Jerome Guillen said on the call that Tesla’s Semi uses the same parts included in the company’s sedans and SUVs today to enable driver assistance features, which Tesla markets as its Autopilot and Full Self Driving options. “I’m looking forward to having some additional ones on the road very soon,” he said.

According to the CEO, the Semi would require five times the number of lithium ion battery cells that a car would use today, but the company could not sell it for five times what it can sell a car. That’s why, Musk said, “It kinda would not make sense for us to do the Semi, but it will absolutely make sense for us to do it as soon as we can address the cell production constraint. The same would go for a van.”

Vans and other light-duty trucks are expected to be in high demand in the U.S. in coming years. One reason is President Biden’s Buy America plan, through which he aims to replace the federal government’s fleet of internal combustion engine vehicles with cleaner, quieter electrics.

According to the most recently available data from the General Services Agency, the federal fleet includes more than 400,000 trucks, a category that encompasses light duty pickups and vans. Tesla competitors including GM, Daimler, Rivian and others are developing, and in some cases already selling, battery electric vans.

“I think Tesla’s definitely going to make an electric van at some point,” Musk said. “The thing to bear in mind is that there is fundamentally a constraint on battery cell output. If you’re not involved in manufacturing, it’s really hard to appreciate just how hard it is to scale production. It’s the hardest thing in the world!”