Tesla may partner with CATL to build new LFP battery factory in US

The chemistry mix and materials of batteries in electric vehicles have become a hot topic in recent years, particularly with key ingredients such as nickel and cobalt being in short supply, and the price of lithium going through the roof.

Tesla is now reported to be setting up a Lithium Iron Phosphate (LFP) battery manufacturing plant in the US, in partnership with Chinese battery giant CATL ,according to reports from Bloomberg.

That’s on the back of US Inflation Reduction Act (IRA) that provides a full $US7,500 tax credit to US buyers that purchase an EV with US-built batteries. 

This rumoured LFP battery manufacturing plant will allow Tesla’s Model 3 single-motor RWD vehicles to be eligible for the full tax credit further accelerating the uptake of EVs in the country by making them more affordable. 

Currently, Tesla’s US-built RWD models use CATL’s LFP batteries which are imported from China, disqualifying the buyers from the full $US7,500 tax credit. That may stop many buyers from considering a Tesla over some other brands.

LFP batteries do not contain supply-constrained minerals like Nickel and Cobalt which are generally more expensive than Iron Phosphate based batteries. 

The main disadvantage of the LFP batteries is the lower energy density which makes them less efficient and provides a lower range in some EV applications. Due to the aerodynamics and other efficiency gains in Tesla’s vehicles, the LFP batteries don’t have as much of a downside over Nickel and Cobalt batteries.

The lowest range being offered in Tesla vehicles in Australia is in the LFP battery-equipped Model Y vehicle is 455 km on the WLTP cycle. That’s very respectable for a mid-sized SUV with thousands delivered onto Australian roads in the last 9 months.

Tesla currency uses the LFP batteries from CATL in its standard range RWD vehicles including those shipped to Australia. These batteries are also more durable with Tesla recommending charging up to 100%.

This includes the Tesla Model 3 and Tesla Model Y RWD variants which happen to be the most affordable EVs from Tesla. 

Ford recently also announced plans for building a $US3.5 billion factory in the state of Michigan which will also be building LFP battery cells. This seems to be a trend many US manufacturers are starting to consider.

More locally, Ford has just revealed details about the upcoming launch of the Mustang Mach-E which will have a single-motor RWD variant. The Mach-E Select will include a 71 kWh Lithium Iron Phosphate (LFP) battery pack with up to 470 km of range.

CATL also recently announced the production plans for its M3P batteries that will deliver a higher range in future EVs.