Tesla CATL LFP battery cells may make the MIC Model 3 a true mass market car. Recently, Reuters reported that an insider stated that Tesla was in talks with the China-based battery supplier to use cobalt-free LFP batteries for its vehicles produced in Giga Shanghai. While many have speculated the ramifications of using less energy-dense cells by Tesla, using CATL's LFP batteries may be quite a strategic move for the EV automaker.
There are two main benefits for Tesla if it switches to CATL’s lithium iron phosphate batteries: 1) no cobalt and 2) cell-to-pack. As previously discussed in a Tesmanian article, cobalt has been known as a problematic mineral, which may be the reason most companies want to stay away from it. First, cobalt is very expensive. Second, cobalt collection is usually mired with controversy, thanks to less than admirable mining practices such as child labor at mines in Congo.
Elon Musk has been vocal about Tesla’s continuous efforts to reduce and eventually eliminate cobalt in the company’s batteries in the past. 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 also reduce the price of the locally made Tesla sedan, making it even more affordable to consumers in the Chinese market.
Tesla / China Model 3 / LFP update: @benchmarkmin data is showing that Tesla will save up to 60% on cathode cost by using LFP in China-made-and-sold Model 3— Simon Moores (@sdmoores) February 20, 2020
This and any pack prismatic innovation is likely to translate to low to mid-20s % saving on total production cost.
However, Simon Moores from Benchmark Minerals—a price reporting agency and market intelligence for lithium ion batteries, EVs, and energy storage chains—suspected that Tesla’s use of CATL LFP batteries has less to do with cobalt than it is for cost savings. Moores suggested that Tesla’s goal with CATL’s lithium iron phosphate batteries cells could be to finally eliminate modules in its battery packs by replacing cylindrical cells with prismatic ones.
Galileo Russell from Hyperchange supported Moores' suggestion in his latest video as well. Russell referred to Elon Musk’s conversation with the Third Row Podcast team in his YouTube video. Musk had said in his Third Row interview that modules were an unnecessary component of Tesla vehicles, specifically the Model 3.
“The modules of the Model 3 aren’t actually interchangeable, so there’s no point in having module actually. We should just have a pack…We really want to move to no such things as module[s]. There’s just cells and packs,” said Musk.
Many wondered why Tesla would replace the MIC Model 3’s NCM battery cells for LFP cells since lithium iron phosphate cathode cells generally have less energy density. However, CATL has been tinkering with cell-to-pack technology with its prismatic cells, reported CleanTechnica, which aligns with Tesla’s own goal.
Based on its analysis of the situation, Benchmark Minerals theorized that Tesla will be replacing its NCM cylindrical cells with CATL’s LFP prismatic cells for the MIC Model 3 Standard Range Plus. The China-based battery supplier’s prismatic cells will be tailor-made to fit Tesla’s battery pack, meaning more cells can fit in one pack, voiding the low energy density issue of LFP batteries.
According to Moores, Tesla could save up to 60% on cathode cost alone if it uses LFP cells for the China-made Model 3. Tesla’s total savings on production costs could be in the low-to-mid 20% if it opts to get rid of modules and uses battery packs filled with prismatic cells for the MIC Model 3.
Without prismatic battery innovation, ie Tesla skipping out the module step, the Model 3 China savings are likely to be in the late teens % total production cost— Simon Moores (@sdmoores) February 20, 2020
Factor in CATL's cell-to-battery technology and Giga Shanghai could make the cheapest Model 3 Standard Range Plus for Tesla, making it the EV automaker's first true mass market car. It must be noted that the locally-made sedan already has a relatively reasonable price in China at RMB299,050.
With its current price tag, the MIC Model 3 has gained popularity in the Chinese market within the first few months of its release. If Tesla does drive the costs down even further with CATL’s LFP batteries, demand could increase even further.
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