Battery titan CATL is central to Tesla’s latest move
Business & Technology
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Tesla is shifting gears on its battery technology its entry-level cars use, using CATL’s specialty lithium-iron-phosphate (LFP) formulation rather than a standard nickel-cobalt battery.
- Using LFP beyond just Model 3s made in China, Elon Musk is aiming to control costs — cobalt is up 70% this year, with nickel up 20% — and use batteries less likely to spontaneously combust.
- That’s where CATL comes in. The company has ambitions for complete vertical integration of the battery-making process; its market dominance and LFP innovations mean it’s better positioned than any company to win most of Tesla’s business.
However: U.S.-China tensions could get in the way. China is the place where 95% of LFP batteries are made, which would change if Tesla’s plan succeeds:
- It wants key components made where the cars are. That means a battery factory near its U.S. car factories, whether run by CATL or someone else.
- But CATL is iffy on building a U.S. facility as long as political tensions remain, informed sources have said.
Also relevant: Tesla’s planned shift to a stabler, safer battery comes at an opportune time: the Ministry of Industry and Information Technology said this week it will require EV and other so-called new energy vehicle makers to address battery fires and other mechanical defects.
