Tesla is rumored to be planning a brand new battery manufacturing facility to supply LFP cells within the US with China’s CATL, the world’s largest battery producer.

Over the previous few years, CEO Elon Musk has mentioned a number of occasions that Tesla plans to shift extra electrical vehicles to LFP batteries so as to overcome nickel and cobalt provide considerations.

Iron phosphate (LFP) batteries, which don’t use nickel or cobalt, are historically cheaper and safer, however they provide much less power density, which suggests much less effectivity and a shorter vary for electrical autos.

Nonetheless, they’ve improved sufficient lately that it now is sensible to make use of cobalt-free batteries in lower-end and shorter-range autos. It additionally frees up the manufacturing of battery cells with different, extra energy-dense chemistries to supply longer-range autos.

The primary subject is that LFP battery cell manufacturing is presently nearly solely concentrated in China. Due to this fact, it creates a logistical downside for electrical autos produced in different markets.

Moreover, within the US, it creates an issue for automakers attempting to make the most of the brand new federal tax credit score for electrical autos, which requires that the batteries of electrical autos be produced in North America to ensure that consumers to get the total $7,500 credit score. It creates a requirement to deliver LFP manufacturing to North America.

Ford has lately introduced a plan to accomplice with CATL, the world’s largest battery cell producer, to construct LFP battery cells at a $3.5 billion manufacturing facility in Michigan.

Now Tesla is rumored to be doing the identical factor. Bloomberg first reported the rumor:

The EV maker mentioned plans involving Up to date Amperex Know-how Co. Ltd. with the White Home in latest days, mentioned the folks, who requested to not be recognized revealing non-public conversations. Tesla representatives sought readability on the Inflation Discount Act guidelines that the Biden administration is finalizing this week, in keeping with a number of the folks. Rohan Patel, the corporate’s senior world director of public coverage, was amongst these concerned with the discussions, one of many folks mentioned.

The report is mild on element, but it surely states that Tesla is an analogous construction to Ford’s personal cope with CATL. Texas has additionally been rumored to be a attainable location for the brand new manufacturing facility.

The LFP cells would allow Tesla consumers to get the total tax on the bottom Mannequin 3, which is about to lose the inducement as a result of its cells presently come from CATL’s Chinese language factories.