Tesla in talks on the use of cobalt-free batteries of CATL cars manufactured in China

Tesla in talks on the use of cobalt-free batteries of CATL cars manufactured in China

Beijing, 29.6.2020

With the adoption, the US car manufacturer would include so-called lithium iron phosphate (LFP) batteries in its product range for the first time, as it wants to reduce production costs against the background of fluctuating total EV sales in China.

Tesla has been negotiating with the Chinese manufacturer for more than a year to supply LFP batteries that will be „double-digit percent“ cheaper than its existing batteries, an insider said. Both Tesla Inc. and Contemporary Amperex Technology Co Ltd. (CATL) declined to comment.

Manufacturers of electric vehicles typically use nickel-cobalt-aluminum (NCA) or nickel-manganese-cobalt (NMC) batteries in passenger cars because of their higher energy density, which determines how far an electric vehicle can travel on a single charge.

To increase the density and safety of its LFP batteries, CATL has been working on its so-called cell-to-pack technology.

It is not clear to what extent Tesla intends to use LFP batteries, but the automaker has no plans to discontinue the use of its current NCA batteries, one of the people said.

Tesla has ramped up production of its Model 3 cars in its newly built $2 billion Shanghai plant and lowered prices to gain market share from conventional premium car manufacturers such as German BMW AG (BMWG.DE) and Daimler AG (DAIGn.DE).

In December, Tesla began delivering cars from the plant, saving shipping costs and customs duties on imported models. The company is currently seeking official approval to manufacture model 3 vehicles with a longer range at the plant.

Sales of new energy vehicles in China – which include pure battery, plug-in hybrid and fuel cell vehicles – are likely to have fallen 54.4% in January, according to industry data, partly due to the lunar New Year holiday, which started earlier than last year, and the impact of the outbreak of a new corona virus in China.

The use of LFP batteries will also help Chief Executive Elon Musk deliver on a 2018 promise that Tesla would reduce its use of cobalt – which costs around $33,500 per tonne – to „almost nothing“.