Photo: Tesla
New rumors indicate that Tesla will buy equipment from CATL to start production of LFP cells in Sparkes, Nevada. The EV maker is struggling to ramp up 4680 cell production and also needs to produce cheaper battery cells in the US to benefit from the IRA incentives.
The Inflation Reduction Act (IRA) doesn't just offer tax credits to those who buy electric vehicles. It also incentivizes battery manufacturers to start local production in the US. This is one of the reasons many battery producers and even carmakers shelved plans to produce batteries in Europe and pivoted to the US market instead. The federal government pays $35 per kWh for batteries made in North America, which represents over one-third of the manufacturing costs at current prices.
Despite these incentives, local production hasn't been able to keep up with EV production, which is why Tesla suffers. With the stricter rules for the 2024 tax credit, fewer models qualify, placing them at a disadvantage. In the case of Tesla, we've seen that the refreshed Model 3 lost the tax credit for all but the Performance model, which is still not available. Without the tax credit, the Model 3 is more expensive than the Model Y, making it a less sensible purchase.
For now, Tesla is using 2170 cells from Panasonic to produce the Model Y in the US and 18650 cells (also from Panasonic) for the Model S and Model X. It also imports a lot of cells and battery components from China. The few 4680 cells it makes at Giga Texas are all destined for the Cybertruck. Although Tesla claims that the battery cells are not a bottleneck, we know that Tesla would like to have more 4680 cells available. This will not be possible until Panasonic starts producing the larger cells later this year. Panasonic is also installing additional 2170-cell production lines at a new battery factory in Kansas.
If ternary battery cells finally become ubiquitous toward the end of 2024, lithium-iron-phosphate (LFP) cells will still have to be imported from China for now. This means no tax credit for the Model 3 RWD or other models using the cheaper battery cells. Tesla is aware of that and is considering starting US production of LFP cells in Nevada.
According to a Bloomberg report, Tesla will buy the equipment from CATL, the world leader in LFP cell production, and install it in a new facility in Sparks, Nevada. Tesla will have full control of the facility and cover 100% of the costs, avoiding the kind of scrutiny Ford faced when it announced LFP production a year ago. Ford wanted to license the LFP technology from CATL. Tesla, on the other hand, only buys the equipment. The Chinese manufacturer's personnel will help set up the equipment but will not be involved in operating the LFP production line.
Tesla intends to start small, with an initial capacity of 10 GWh of LFP cells for use in its battery storage systems (Megapacks), which it produces in Lathrop, California. Later on, as Tesla becomes familiar with the manufacturing process and the supply chain is established, it will also expand production for use in EV battery packs. Tesla intends to double the production capacity at its Megapack factory in Lathrop, as its Energy business is booming.
Despite these incentives, local production hasn't been able to keep up with EV production, which is why Tesla suffers. With the stricter rules for the 2024 tax credit, fewer models qualify, placing them at a disadvantage. In the case of Tesla, we've seen that the refreshed Model 3 lost the tax credit for all but the Performance model, which is still not available. Without the tax credit, the Model 3 is more expensive than the Model Y, making it a less sensible purchase.
For now, Tesla is using 2170 cells from Panasonic to produce the Model Y in the US and 18650 cells (also from Panasonic) for the Model S and Model X. It also imports a lot of cells and battery components from China. The few 4680 cells it makes at Giga Texas are all destined for the Cybertruck. Although Tesla claims that the battery cells are not a bottleneck, we know that Tesla would like to have more 4680 cells available. This will not be possible until Panasonic starts producing the larger cells later this year. Panasonic is also installing additional 2170-cell production lines at a new battery factory in Kansas.
If ternary battery cells finally become ubiquitous toward the end of 2024, lithium-iron-phosphate (LFP) cells will still have to be imported from China for now. This means no tax credit for the Model 3 RWD or other models using the cheaper battery cells. Tesla is aware of that and is considering starting US production of LFP cells in Nevada.
According to a Bloomberg report, Tesla will buy the equipment from CATL, the world leader in LFP cell production, and install it in a new facility in Sparks, Nevada. Tesla will have full control of the facility and cover 100% of the costs, avoiding the kind of scrutiny Ford faced when it announced LFP production a year ago. Ford wanted to license the LFP technology from CATL. Tesla, on the other hand, only buys the equipment. The Chinese manufacturer's personnel will help set up the equipment but will not be involved in operating the LFP production line.
Tesla intends to start small, with an initial capacity of 10 GWh of LFP cells for use in its battery storage systems (Megapacks), which it produces in Lathrop, California. Later on, as Tesla becomes familiar with the manufacturing process and the supply chain is established, it will also expand production for use in EV battery packs. Tesla intends to double the production capacity at its Megapack factory in Lathrop, as its Energy business is booming.
Google News