Confidential sources tell Reuters that Tesla will begin selling Model 3 cars built in Shanghai and equipped with LFP batteries to customers in China on Thursday of this week. Although prices have not been announced, lithium iron phosphate batteries contain no nickel and no cobalt, two of the most costly components of conventional NMC or nickel manganese cobalt batteries, which suggests the price of the Model 3 may drop shortly.
Until now, most Model 3s built in the US and China have used NMC batteries. At the present time, the price of a Model 3 in China is equivalent to $39,900 after all government incentives. Tesla will announce the product change as early as Thursday, the two sources told Reuters but declined to use their names as they were not authorized to speak about confidential matters. Tesla will use LFP batteries in all standard range Model 3 vehicles made in China, according to those sources.
We can assume the LFP batteries are being supplied to Tesla by CATL, which has announced several new improvements to its lithium iron phosphate batteries this year and is known to have close ties to Tesla. In June, CATL told the world it was ready to begin production of cobalt free batteries that would be about 10% less expensive than traditional NMC batteries and have a useful life of 2 million kilometers. “If someone places an order, we are ready to produce,” said Zeng Yuqun, CEO of CATL, without disclosing if contracts for the long distance product have been signed. LFP batteries are expected to cost about 10% less than NMC batteries says Zeng.
In August, CATL let it be known it was working on batteries with no cobalt and no nickel. Shortly thereafter, Elon Musk began talking about his company having a million mile battery soon. Is that a coincidence or a sign that the two companies are working closely together? Both CATL and Tesla declined comment on the Reuters story.
The next question is whether LFP batteries will begin showing up in Tesla products sold in other countries. They don’t have quite the energy density of NMC batteries but if the price advantage is significant, buyers may care more about a lower price than a few extra miles of range. Stay tuned. Film at 11.