Tesla said Wednesday it will use iron-based batteries for its standard Model 3 and Model Y models across global markets. The update, provided in the company's third-quarter earnings report, confirmed hints that Tesla CEO Elon Musk has been dropping for months about the cheaper battery chemistry's growing role in the company's product line-up.
Lithium-iron-phosphate (LFP) batteries use an older, cheaper battery chemistry and are popular in China. Outside of China, EV batteries are predominately nickel-based — either nickel-manganese-cobalt or nickel-cobalt-aluminum. But beyond cost savings, LFP battery cells are attractive because they are not dependent on ultra-scarce raw materials like cobalt and nickel. Notably, Tesla CFO Zach Kirkhorn confirmed during an investor call Wednesday that the company has seen pricing impacts to nickel and aluminum.
One major reason why LFP batteries are not seen much outside of China relates to a series of key LFP patents, which have allowed the country to dominate the LFP market.
But those patents will soon be expiring, and it seems that Tesla has its eye on that timeframe, with executives suggesting that the company intends to bring LFP battery production to the same locations where it manufactures its vehicles.
“Our goal is to localize all key parts of the vehicles on the continent -- at least the continent, if not closer, to where the vehicles are produced,” Drew Baglino, SVP of Powertrain and Energy Engineering at Tesla, told investors....
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