According to Rumours, Tesla and CATL are Preparing to build a US LFP Battery Cell Factory

According to rumours, Tesla is partnering with China’s CATL, the largest battery manufacturer in the world, to build a new battery factory in the US to create LFP cells.

Elon Musk, CEO of Tesla, has repeatedly stated that the company intends to switch more electric vehicles to LFP batteries in order to address nickel and cobalt availability issues over the past few years.

Batteries made of iron phosphate (LFP), which don’t contain nickel or cobalt, are typically less expensive and safer, but they have a lower energy density, which reduces their effectiveness and shortens the range of electric cars.

However, they have lately advanced to the point where it is sensible to use cobalt-free batteries in less expensive, shorter-range cars.

In order to create longer-range vehicles, it also frees up the manufacturing of battery cells with different, more energy-dense chemistries.

The main problem is that China presently produces almost all of the world’s LFP battery cells. It consequently presents a logistical challenge for electric cars made for other markets.

Additionally, it makes it difficult for manufacturers to benefit from the new federal tax credit for electric cars in the US, which stipulates that batteries must be made in North America for purchasers to qualify for the full $7,500 credit. It generates a need for LFP manufacturing in North America.

Ford recently revealed plans to collaborate with CATL, the largest battery cell producer in the world, to assemble LFP battery cells at a $3.5 billion facility in Michigan.

Tesla is reportedly doing the identical thing right now. Bloomberg was the first to break the rumour:

The EV manufacturer recently spoke with the White House about plans involving Contemporary Amperex Technologies Co. Ltd., according to the people, who asked not to be named to expose confidential conversations. According to several of the persons, Tesla reps requested clarification on the Inflation Reduction Act regulations that the Biden administration is finalising this week. One of the individuals said that Rohan Patel, the organization’s top global director of public policy, took part in the conversations.

Although the article lacks specifics, it claims that Tesla is considering a structure that is comparable to Ford’s own agreement with CATL. Texas is another state that has been mentioned as a potential destination for the new manufacturing.

The base Model 3 will soon lose the incentive since its cells are now made in CATL’s China plants, but Tesla buyers would be able to receive the entire tax on the model with LFP cells.

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