Tesla Signs Contract with BYD to Supply 10 GWh of LFP Batteries: Report

Image: BYD

Tesla said it is moving to production of standard Model 3 and Y worldwide using an LFP battery. The source said that Tesla has entered into a contract with BYD to supply 10 GWh of LFP batteries.

During the Q3 2021 Earnings Call, Tesla announced that it will use iron-based batteries for its standard Model 3 and Model Y models in all markets worldwide. This confirmed the earlier statements of CEO Elon Musk, and finally outlined the direction of the company in this regard.

Lithium Iron Phosphate (LFP) batteries use a cheaper chemical composition and are popular in China. Outside of China, the electric vehicle batteries produced are primarily nickel-based—either nickel-manganese-cobalt or nickel-cobalt-aluminum. In addition to cost savings, LFP battery cells are attractive in that they do not rely on scarce raw materials such as cobalt and nickel, which, among other things, raise moral questions in their mining.

In connection with Tesla's announcement, today again appeared information that the company will buy LFP batteries from BYD. A CLS.cn source said that an American electric vehicle manufacturer has signed a deal to supply 10 GWh of LFP batteries. “The information I received is that BYD has already received a Tesla order for 10 GWh,” said an aforementioned industry source close to BYD.

According to the source, the order from Tesla came due to the fact that BYD already has a factory in Lancaster, California, USA, which greatly simplifies the supply of batteries to the manufacturer's factories in the USA. The BYD facility has an installed capacity of 1 GWh per year, however the production lines can be expanded to meet the growing demand. Note that the CLS.cn article states that BYD's factory is located in Lancaster, Pennsylvania, which may be due to a lack of knowledge of the manufacturer's details. Although, on the other hand, it may raise doubts about the reliability of the information.

None of the manufacturers has confirmed this information.

In August it became known that a CLS.cn reporter had learned from a number of people familiar with the matter that BYD is going to supply Tesla with "blade" batteries in the second quarter of 2022. In addition, sources said that Tesla models that will be equipped with these batteries have already entered the C-sample testing phase. Days later, BYD denied rumors that it was supplying "blade" batteries to Tesla, claiming the company never told the media it would do so.

Bearing in mind that Tesla has a plan for rapid global expansion—to increase production capacity by 50% annually—purchasing as many battery cells as possible is a smart move. However, as always, do not forget that any information should be viewed with a reasonable degree of skepticism. 

© 2021, Eva Fox | Tesmanian. All rights reserved.

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