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On February 3, CATL announced that it had signed a two-year supply agreement with Tesla, valid from July 1, 2020, to June 30, 2022. At the end of May, Tesla asked the Chinese government to authorize the production of Model 3, made in a country equipped with LFP batteries.
According to Chinese media, CATL confirms that it will start to ship LFP battery cells to GF3 sometime this month. The original shipment time is August. All MIC SP M3s will be made with LFP battery packs. pic.twitter.com/cTSPh1A35u— Ray4️⃣Tesla⚡️🚘☀️🔋 (@ray4tesla) July 17, 2020
One of the biggest advantages is the lower cost. It is estimated that CATL LFP batteries will cost about $80/kW at the cell level, and around $100/kW at the pack level, which could lead to savings of $3,000 to $4,000 per vehicle for Tesla. The price of Model 3 may fall even further thanks to new cheaper batteries, which will dramatically bolster demand in China.
On June 11, it became known that Tesla has received state approval for the production of made-in-China Model 3s equipped with LFP batteries, according to a document on the website of the Ministry of Industry and Information Technology. The name of the battery manufacturer is not indicated in the document. Nevertheless, in light of recent events, it can be assumed that the supplier is CATL.
LFP batteries can make the MIC Model 3 a true mass-market car. While many have speculated the ramifications of using less energy-dense cells by Tesla, using CATL's LFP batteries may be quite the strategic move for the EV automaker.
There are two main benefits for Tesla if it switches to CATL’s lithium iron phosphate batteries:
- no cobalt and
Cobalt has been known as a problematic mineral, which may be the reason most companies want to stay away from it. First, the cobalt is very expensive. Second, cobalt collection is usually mired with controversy, thanks to less than admirable mining practices.
Elon Musk has been vocal about Tesla’s continuous efforts to reduce and eventually eliminate cobalt in the company’s batteries. The made-in-China Model 3 could be the first Tesla vehicle to reach that goal thanks to CATL’s LFP battery. Cobalt-free cells could reduce the price of the locally made Tesla sedan, making it even more affordable to consumers in the Chinese market.
About the Author
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.