Tesla Inc. seems to have gotten it right. The usually fantastical Elon Musk is set to give the electric vehicle market and its various players a reality check.
At its third quarter earnings call, Tesla said it’s switching to a less expensive type of battery – the central part of the vehicle – for the company’s standard-range cars globally. Tesla already had been using these in some of its cars in China, where sales have been soaring primarily because prices were kept down. That was a shrewd, prescient and realistic move.
For one, these aren’t just cheaper batteries; they are safer and readily available. That means even if they aren’t going to take Teslas several hundreds of miles away on one charge, they will drive the company toward greater sales and, ultimately, wider adoption of greener vehicles. A Tesla Model 3 on these lithium iron-phosphate, or LFP, powerpacks can still go 468 kilometers (290 miles). That's really not that short a distance — these batteries will do the job.
The LFPs in question are made by China’s Contemporary Amperex Technology Co., or CATL, now the world’s largest battery maker. Supply is ample: Over the past few months, installations of such batteries have surpassed those of the more favored nickel-cobalt-manganese variety, which are more advanced. CATL has managed to bring down prices, too – another barrier to adoption. What’s more, China effectively has a monopoly on the manufacturing of LFPs, with the highest capacity to produce them. That’s...
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