Tesla to make LFP battery at Nevada plant with Chinese equipments

Electric vehicle maker Tesla is reportedly planning to establish a local battery supply chain in Nevada to make in-house batteries for new vehicles.

Bloomberg reported that Tesla is resourcing equipment from China’s largest battery maker Contemporary Amperex Technology Limited (CATL).

The current plans suggest that the EV maker is looking to make lithium iron phosphate batteries (LFP), a cheaper option to reduce vehicle costs. The expansion of the Nevada plant would facilitate this new operation and initially, Tesla seeking a capacity of 10 gigawatt hours.

Tesla operates the Nevada plant with its Japanese partner Panasonic to manufacture Lithium-ion battery cells for Tesla EVs. This facility is primarily used for 2170 battery cells jointly developed by the two companies.

Restrictions:

This report comes after the U.S. changed its policies for new energy vehicles and eligibility guidelines for the federal tax credits.

These new rules bar any car makers from sourcing battery components and minerals produced locally in North America or any other U.S. partner country with a free trade agreement.

As a result, Tesla lost a $7,500 tax credit for its Tesla Model 3 compact sedan which uses Chinese battery components.

LFP battery

LFP batteries are quite popular in the EV sector for their safety, durability, and importantly their price factor.

For now, China is the largest manufacturer of LFP batteries, and two of its biggest battery makers BYD and CATL are battery suppliers to Tesla.