Tesla’s next-gen non-LFP battery may protect the company from an impending cobalt crisis due to the rise of EV adoption across the globe. Batteries cells seem to be the main obstacle traditional automakers need to solve before they can fully commit to the EV market. As always, Tesla appears to be ahead of the curve when it comes to battery capacity and, more importantly, its battery supply chain.
Tesla is in the middle of negotiations with CATL about cobalt-free batteries, according to recent news. The cobalt-free cells were supposedly for Giga Shanghai’s Model 3 Standard Range Plus production line.
Initial reactions from the electric car community involved speculations that Tesla may be looking to use CATL’s lithium iron phosphate (LFP) cells. However, a Tesla official social media account in China hinted that the electric car maker may have developed a cobalt-free battery that wasn’t LFP at all.
If Tesla did develop a cobalt-free non-LFP battery cell, then it could avoid the impending cobalt crisis predicted by WIRED. The UK-based website recently theorized that a cobalt crisis would occur as more veteran automakers entered the EV market.
According to Deloitte, battery electric vehicles (BEVs) and internal combustion engine cars (ICE) would reach price parity by 2022. As a result, BEVs would become a viable option for new car buyers, which could increase the market share of electric vehicles in the automotive industry to ten percent by 2024.
As BEV demand continues to grow, legacy automakers will need to form new supply chains, specifically for the production of batteries. Tesla understands the importance of battery capacity in the EV market. This was made clear during Tesla’s latest Earnings Call.
“So, the thing we're going to be really focused on is increasing battery production capacity because that's very fundamental because if you don't improve battery production capacity, then you end up just shifting unit volume from one product to another, and you haven't actually produced more electric vehicles,” explained Elon Musk when Gene Munster from Loup Ventures asked about the cost of producing the Tesla Cybertruck.
“So, that's part of the reason why we have not, for example, really accelerated production of the Tesla Semi because it does use a lot of cells and unless we've got a lot of battery cells available, then -- and say like accelerating production of the Tesla Semi would then necessarily mean making pure Model 3 or Model Y cars. And so, we've got a really -- make sure we get a very steep ramp in battery production and continue to improve the cost per kilowatt-hour of the batteries. This is very fundamental and extremely difficult,” Musk added.
As Musk explained during the Q4 Earnings Call, battery production capacity significantly affects the amount of EVs a company can manufacture. Legacy automakers starting in the EV market will have to tackle the challenges of battery production capacity. OEMs who have already ventured into the market have already felt the consequences of not fully concentrating on this. The Jaguar I-PACE and the Audi e-tron’s ongoing production difficulties reveal the impact battery supply can have on EV manufacturing.
One of the main bottlenecks in battery production would be the acquisition of raw materials for lithium-ion batteries, specifically cobalt. Similar to lithium, cobalt is a necessary component of EV batteries. Cobalt is required to make batteries for all-electric vehicles more energy-dense. Cobalt-free cells—which most believe referred to lithium iron phosphate batteries—are generally low in density. As such, LFP cells are usually not preferred for high-performance EVs like Teslas.
Currently, the Democratic Republic of the Congo (DRC) mines 59% of the world’s cobalt supply. According to an analysis by MIT researchers, the demand for lithium-ion batteries for electric vehicles is projected to increase by over 300% throughout the next decade.
Legacy automakers will be vying over cobalt supply for their upcoming battery electric vehicles because there aren’t enough mines to support the OEMs' supply chains. MIT Professor Elsa Olivetti, who played a part in the analysis, described where these difficulties lie.
Tesla CATL LFP Battery Cells Make The MIC Model 3 A True Mass Market Car https://t.co/nClb6n2lXp— Tesmanian.com (@Tesmanian_com) February 20, 2020
“The delay is in the ability to open new mines. With any of these things, the material is out there, but the question is at what price.” To guard against possible disruptions in the cobalt supply, she says, researchers “are trying to move to cathode materials [for lithium-ion batteries] that are less cobalt-dependent,” she said.
Tesla seems to have anticipated the increased demand for cobalt since the days of the Model S. Over the years, Tesla has worked on reducing the cobalt content of its vehicles’ batteries. Now, based on the recent news from China, it appears that Tesla has managed to come up with a solution to remove cobalt altogether. This will allow Tesla to evade what could very well be an impending cobalt crisis, which will be fueled by the rise of EVs from mainstream carmakers.
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