Tesla battery plans take shape with China’s CATL and Panasonic

Tesla’s mission to build in excess of 500,000 electric cars a year, followed by the launch of the Cybertruck and electric Semi, is taking shape as details of crucial deals with battery makers CATL and Panasonic emerge.

A timeline for Tesla’s deal with Chinese battery maker CATL has been confirmed publicly by the company, according to a report by South Korean media, and – most interestingly – the deal will not be limited to provision of electric car batteries in China.

In February, it was reported that CATL had signed a deal with Tesla following a preliminary agreement in November to procure batteries to make the Model 3 at its Shanghai Gigafactory 3.

As The Driven reported in February, Tesla CEO and co-founder Elon Musk had met privately with the CATL chair regarding what was understood to be a possible global battery deal, the first for the Californian car maker outside of its deal with Panasonic.

Speaking at CATL’s annual investor’s conference, CATL chair and founder Yuqun Zeng has now reportedly confirmed a mid-2020 timeline, saying, “We started cooperation with Tesla early (and the lithium iron phosphate battery) will be available from the second half of the year.”

Zeng also emphasised that “the cooperation with Tesla is not limited to China,” according to the report in TheElec, a South Korean tech news site.

Now, the new report links the construction of Tesla’s Gigafactory 4 near Berlin with the fact that CATL is also building a battery factory in Germany as part of a plan to increase capacity to 100GWh in 2025. Currently, CATL’s battery capacity is 53 GWh, and the capacity of the battery plant under construction is 22GWh.

This is significant because, as The Driven reported on Monday, the low-cost, no-cobalt, lithium iron phosphate (LFP) battery packs that CATL reportedly will sell to Tesla could significantly reduce the price of electric cars, bringing pack prices to $US80/kWh – well below the $US100/kWh price needed for price parity with internal combustion engine vehicles.

CATL also plans to increase electric driving range of its batteries by using the Cell To Pack (CTP), a battery pack design without modules.

The report comes as Tesla also reportedly reopens talks with Panasonic about the possibility of expanding capacity at the companies’ joint battery factory in Nevada, US.

While Tesla’s relationship with Panasonic had become strained as the EV maker sought to diversify its battery supply risks through new deals including LG Chem and CATL, Reuters reports that there are now signs of this tension is easing.

“We are seeing strong demand from Tesla,” said Panasonic CFO Hirokazu Umeda at an earnings briefing on Monday according to Reuters, beyond the Nevada’s current 35GWh/year capacity.

“We are in discussions right now,” he said regarding expanding the plant’s capacity.

Umeda also hinted at a new battery chemistry that Panasonic may be working on with Tesla, reportedly saying, “We will be working to improve materials and technologies throughout this financial year.”

Indeed, the heat may well be on Panasonic now, so to speak, as reports come to light that CATL’s work with Tesla will feature heavily in the upcoming Battery Day now promised in an dual online then live audience event.

Until Tesla’s new deals with CATL and LG Chem, Tesla’s electric vehicle battery were exclusively made by Panasonic.

In the first quarter of 2020, LG Chem accounted for 14% of Tesla’s EV battery in the first quarter according to EV-Volumes, but when CATL’s deal goes full swing in mid-2020, Panasonic’s portion will likely fall further unless a deal to expand Nevada capacity can be sealed.