On June 29, Tesla officially announced on social media that its first lithium iron phosphate battery factory in Nevada, USA, will be completed and put into production soon. As early as February 2024, foreign media reported that Tesla was expanding its battery factory in Sparks, Nevada, in order to introduce a cheaper lithium iron phosphate battery (LFP) supply chain into the United States.
The factory is expected to have an initial production capacity of 10GWh, mainly serving the energy storage business and some vehicle models. The equipment will be provided by CATL, and Tesla will have full control over its operations.
Public data shows that CATL is Tesla’s battery supplier and has been supplying Tesla since July 2020. In 2021, Tesla became CATL’s largest customer for the first time, purchasing a total of 13 billion yuan in lithium batteries that year, accounting for 10% of CATL’s total revenue. In 2022, CATL’s lithium battery sales revenue from Tesla was 38 billion yuan, accounting for 11.59% of its total revenue.
The project is an important measure for Tesla to respond to US policies, reduce costs and support the rapid growth of its energy storage business.
Recently, the development of lithium iron phosphate battery industry in the United States has accelerated significantly.
LGES’ battery factory in Michigan has built two lithium iron phosphate battery production lines and started mass production of energy storage soft-pack lithium iron phosphate batteries this month;
The main part of Ford’s first self-built lithium iron phosphate battery factory, which is licensed by CATL, has been completed. Equipment installation is about to begin and production is scheduled to begin next year.
GM also asked LGES and SDI to add lithium iron phosphate battery production lines to its joint venture battery factories in the United States.
Tesla said at an investor conference that the global standard range Model 3 and Model Y will all use lithium iron phosphate batteries. First of all, from a cost perspective, battery costs have always accounted for a large proportion of vehicle production costs, about 50%. As subsidy policies gradually decline, the price advantage of electric vehicles over fuel vehicles is decreasing – and the cost of lithium iron phosphate batteries is much lower than that of ternary lithium batteries. Using this battery can effectively reduce the production cost of vehicles, thereby improving price competitiveness.
If Tesla achieves independent production, it will not only accelerate the popularization of lithium iron phosphate battery technology, but may also force other electric vehicle manufacturers to re-evaluate their supply chain strategies, triggering technological innovation and cost competition in the entire industry.