Tesla to Use Locally Produced LFP Batteries for Model 3 Variants in China

  • A new report suggests that Tesla’s Model 3 could be even cheaper in the Chinese markets thanks to a deal struck with local battery manufacturer CATL.
  • It is said that this new battery will be free of cobalt which in turn would make it significantly cheaper to produce.
  • The plans are currently limited to China, although Tesla is contemplating using advanced battery technologies around the world.

In April, tesla cut down the price of the Standard Range Plus Model 3 in China to bring it in line with local subsidies. However, Tesla CFO Zach Kirkhorn has previously mentioned that the price of these vehicles could go down further.

Well, it seems like we’re now getting new information courtesy of Reuters that Chinese version of the Tesla Model 3 will use locally made batteries thanks to a deal struck with Chinese manufacturer CATL. The company will produce non-cobalt LFP (lithium iron phosphate) batteries which will reportedly bring the costs down significantly.

Tesla Model 3

The batteries supplied by CATL reportedly cost $US80/kWH, which turns out to be a lot cheaper than standard EV batteries that contain cobalt. Additionally, a catalog put out by the Chinese Ministry of Industry and Information Technology (MIIT) has reportedly confirmed that Tesla is using locally manufactured LFP batteries for Chinese Model 3 variants. It’s unclear as to how much cheaper the Model 3 will get in China, although we expect Tesla to share details on that fairly soon.

Tesla CEO Elon Musk has previously said – “Localised production in China and in Europe will bring the cost down, making our products even more competitive over time.” However, this new development is currently limited to China, so it may be a while before these reduced costs roll down to the customers in Europe, as well as the U.S.

One of Tesla’s biggest manufacturing units in Shanghai, also known as Giga Shanghai is expected to produce thousands of Tesla Model 3 units for the local market. Tesla’s sales in the region have been growing to a great extent although the company faces stiff competition from local manufacturers like BYD. The BYD Han is pitched as a viable alternative to the Model 3 in China.

Source: Reuters

Via: The Driven