Tesla in talks to use cobalt-free batteries in electric cars made in China

February 20, 2020

One of the leading electric vehicle manufactures, Tesla, is reportedly in advanced stages of talks to use batteries from Contemporary Amperex Technology Co Ltd (CATL) that contain no cobalt - one of the most expensive metals in electric vehicle batteries - in cars made at its China plant.
Reuters reported that the move would mark the first time for the U.S. automaker to include lithium iron phosphate (LFP) batteries in its lineup, as it seeks to lower production costs.

The move could signal a big shift in the electric vehicle market as well as the cobalt mining sector. Technode reported that Tesla has enjoyed a surge in Model 3 sales in China due to lowered prices on its domestically made version, a significant rebound in overall EV sales is expected to follow.

The Model 3 is Tesla’s most popular, and the US-made version uses the company’s nickel-cobalt-aluminum (NCA) cathode chemistry. Most other automakers favor nickel-cobalt-manganese (NCM) cathode chemistries.

According to Investment bank China International Capital Corp. (CICC) The total sales volume of LFP batteries is set to grow up to 54 percent year on year to 31 gigawatt hours (GWh) in 2020, compared with an annual decrease of 8 percent last year. CICC also reported that it estimates a 34 percent increase in China’s electric vehicle sales to 1.56 million units this year, lifted by sales of the locally made Model 3.

To boost the density and safety of its LFP batteries, CATL has been working on its cell-to-pack technology, the people told Reuters.

Tesla has been ramping up production of its Model 3 cars at its newly built $2 billion Shanghai plant and cutting prices to win market share from conventional premium automakers such as Germany’s BMW AG and Daimler AG.

Tesla started to deliver cars from the factory in December, helping it save on shipping costs and tariffs for imported models. It is currently seeking regulatory approval to make longer-range Model 3 cars at the plant.

Sales in China of new energy vehicles - referring to battery-only, plug-in hybrid and fuel-cell vehicles - likely sank 54.4 percent in January,

industry data showed, due in part to the Lunar New Year holiday starting earlier than last year as well as the impact of the outbreak in China of a new coronavirus.

The use of LFP batteries will also help Tesla chief executive Elon Musk meet a 2018 promise that Tesla would cut the use of cobalt - which costs some $33,500/t - to “almost nothing.”

Tesla plans to host a battery event, probably in April, to share its future battery strategy and technology, Musk said at an earnings conference in January.
  

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