The 2022 Tesla Model Y Update Is Here!

In January 2022 the Tesla Model Y SUV moved into the top spot for best selling electric car in the world - surpassing the Tesla Model 3 and even the HongGuang Mini - which is the most popular car in China and only costs about 5 grand. And with Model Y production kicking off at two new Tesla factories in the US and Germany and new battery upgrades on the horizon, this is shaping up to be the year that the Model Y firmly unseats the Model 3 as the world’s number one electric vehicle. It was just under one year ago that Elon Musk predicted the Model Y would become the best selling car in the world of any kind by the end of 2022. Will that come true? Probably not this year, but it will absolutely happen before too long. So today we’re going to run through some of the ways that Tesla is setting up the Model Y to be the best car in the world.

OK, the big buzz around the Model Y in 2022 is that it will get a brand new battery pack. This is an in-house made Tesla designed battery pack with an all new cell format called the 4680. It’s the largest battery cell that Tesla have ever used, at about 5 times the size of the battery in the current Model Y, and offering 6 times more power output.

At first, this new 4680 battery will only be available in the Model Y built at Tesla’s Austin, Texas factory. These cars are being built and stockpiled right now as Tesla awaits an EPA Certificate of Conformity approval before they can go ahead with customer deliveries. Because the Texas made Model Y has a new battery pack, it also needs a new approval.

In the meantime, we can see hundreds of Model Ys being collected in the parking lot outside the factory. So far, every Model Y built at Giga Texas has been either black or blue, which admittedly doesn’t tell us much. But there is a lot that we can learn from the wheels on these cars. Most of the Model Ys stored at Giga Texas clearly have the silver 19 inch Gemini wheels - and that means that these are definitely the Long Range variation of the car. Because the Performance option only comes with blacked out Uber Turbine wheels.

I know this doesn’t seem like much, but it’s actually pretty fascinating. Because traditionally with a new product rollout, Tesla will come out of the gate with the highest spec’d, and therefore highest profit margin, vehicle first. So, we would have expected these to all be Model Y Performance at Texas. Or at the very least, Model Y with upgraded wheels.

We know that this is the case over at the other new GigaFactory in Berlin Germany, where Tesla are also staging new vehicles in preparation for customer deliveries. So far we’ve only seen the Performance version of the Model Y around that factory and all reports suggest that the first round of vehicles delivered from the Berlin plant will be Model Y Performance - that should happen before the end of this month now that everything has been cleared with state officials.

These new German Model Y’s however will not be coming with the new battery pack and 4680 cells. Because of a few unexpected setbacks in getting Berlin up and running and approved by the local government, their battery cell production facility won’t be functioning until later this year. So for now, the Model Y at Giga Berlin will use battery packs that are being produced at Tesla’s Shanghai factory - according to reports, the Chinese factory will be able to export up to 5,000 battery packs per week for German manufacturing. Though it’s likely the actual production rate will be much below that for a little while, probably reaching about 1,000 cars per week in Germany by the end of April.

The rumor is that at some point in the second half of this year, production will halt at Giga Berlin for 3 weeks while they transition to new battery packs with the 4680 cells also made in Germany.

Not that there's anything wrong with Tesla’s current battery cell, they still outperform every other electric car on the market in terms of efficiency. As it stands, the Model Y Long Range offers 330 miles of EPA range with a 75 kilowatt hour battery pack. For comparison, the brand new Cadillac Lyriq, which is also an electric crossover SUV, is debuting this month with 300 miles of range in a 100 kilowatt hour battery pack. So 25 percent larger battery capacity and 10% lower range than the Tesla. And this is the latest and greatest from General Motors versus Tesla’s legacy battery pack technology that was introduced with the Model 3 back in 2017.

With the new 4680 battery pack, Tesla estimates they can gain up to 30% more range from that same 75 kW energy capacity - which would work out to about 430 miles of range in the Model Y. Elon Musk has said recently that Tesla could easily make a car with over 600 miles of range if they wanted to, but he doesn’t think that would be worthwhile because no one really needs that much range and the larger battery pack would make the car too heavy and therefore not as fun to drive.

Back in Texas, the supply of those new 4680 battery cells will be ramping over the coming month to support all of these new and improved Model Y’s that will be shipping out to American customers. Right now, the 4680 cells are only manufactured in one factory located in California. This battery factory produced their 1 millionth cell by late January 2022, and they are forecasted to reach their 2 millionth cell by the end of March. So about half a million cells per month right now. That sounds like a lot, but 1 million 4680 cells are estimated to be enough for only about 1,000 Model Ys, so enough batteries right now to build about 500 cars per month in Texas. But that battery supply from California will ramp up as production gets more efficient.

And that will be met by 4680 cell production inside Giga texas itself. We know that the machines for cell production have been installed at the factory already, and they are reported to begin work as early as next month, April 2022.

Now, that’s not to say that everything will be smooth sailing either. Commodities prices are going to be a significant challenge throughout this year. 2021 was the year of microchip shortages, 2022 is already shaping up to be the year of fuel and resource shortages. In particular, the cost of nickel is going insane at the moment - it just spiked by 250% in only two days to an all time high price above $100,000 USD per ton. It’s such an unprecedented price swing that the London Metal Exchange canceled all nickel trading as of March 8th. 

We’re not commodities traders here, so I can’t tell you exactly what that all means, but I can say for sure that people are freaking out about it. Of course, this mess is triggered by who else but the current reigning champion for biggest asshole on planet Earth, Mr. Putin. Russia just happens to be one of the largest producers of nickel in the world, with one Russian producer ranking as the number one producer of top-grade nickel globally. And top-grade nickel is an essential ingredient for high end electric car batteries like the Tesla 4680 - it’s loaded with nickel.

Analysts are already forecasting that the cost of producing an electric car battery pack will rise by around $1,000 USD per car - so by the time that price increase reaches the consumer it’s going to be significantly more than that… Bad news.

Now, knowing the way that Tesla operates, they will be less impacted than most. Because Tesla has been making moves to secure their own private contracts for battery materials, nickel being key among them. And we know that Tesla has been making those deals with mines primarily in the South Pacific region around Australia, far from Russia or even Europe. Tesla have a massive deal already done with the Goro mine in New Caledonia, a South Pacific island that contains as much as one quarter of all nickel reserves on Earth, and they have the capacity to produce that top-grade product that is going to become extremely hard to come by now that Putin has made Russia public enemy number one.

Now, this is all very early reactions and I don’t feel like being a prophet of doom today, so that’s all we’re going to say about that, other than we’ll keep an eye on it and let you know if anything weird happens.

But I do want to pivot to a topic that has potential to counterbalance that whole mess with nickel supply - and that’s the LFP battery pack, more technically known as lithium iron phosphate chemistry. These are still lithium ion batteries, but they’re made with iron cathodes instead of nickel. Just plain old iron, it’s so widely available that the price has never gone above 220 bucks per ton, and is right now trading at just $160 USD per ton. The world’s largest producers of iron ore are China, Australia and Brazil. That’s good news.

These LFP battery packs have been used by Tesla in China for years already, and they are being expanded to more and more cars across the world. Just in the last few months Tesla has transitioned the Model 3 Standard Range made in California to an LFP battery.

And my bold prediction for 2022 is that we also see an LFP Standard Range Model Y introduced to North America as well. This exact vehicle has already been produced at Tesla’s Shanghai factory since summer 2021, and it is available to order only for customers in the Asia Pacific region of the world right now. This Model Y variation has just one motor with rear wheel drive and has reduced range and slower acceleration than the dual motor option with nickel based battery chemistry. The LFP cells have a much lower energy density, so they can’t power dual motors or offer an exceptionally long range. But they’re still perfectly fine.

So, if we go off of the Tesla Hong Kong ordering page, we can see the standard Model Y has 455 Km WLTP range compared to 542 Km in the Long Range Dual Motor option - not exactly a huge loss. The single motor does make the car a lot less fun though, with zero to 100 Kmph listed at 6.9 seconds, compared to 5 seconds flat for the dual motor. BUT it’s also about 50,000 Hong Kong dollars cheaper, which is nearly $6,400 USD - pretty nice savings and if we listen to those analysts then we can imagine that the price gap between iron and nickel based cells will only get wider.

So, to keep a Model Y option on the market at a reasonable price point of say, 50 grand in North America, we think that Tesla will start to roll out a Standard Range LFP Model Y from the Fremont California plant as production of the Dual Motor 4680 Y transitions over to Giga Texas.

If they can cover that range with both mid level and upper mid level pricing, and follow through with production numbers that hit at least 1 million deliveries per year, then there absolutely is a chance for the Model Y to take over as top selling car in the world. We’ll just have to see how things go.