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Tesla announced on Wednesday 20th October 2021, that its basic Model 3 and Model Y vehicles will employ iron-based batteries in all markets. Tesla CEO Elon Musk has been hinting for months about the cheaper battery chemistry’s expanding importance in the company’s product line-up, and the update included in the company’s third-quarter financial release reinforced those suggestions. Lithium-iron-phosphate (LFP) batteries are popular in China because they employ an older, less expensive battery chemistry. EV batteries are mostly nickel-based outside of China, either nickel-manganese-cobalt or nickel-cobalt-aluminum. However, LFP battery cells are appealing since they are not reliant on ultra-rare raw elements like cobalt and nickel. During an investor call on Wednesday 20th October 2021, Tesla CFO Zach Kirkhorn acknowledged that the business has noticed pricing pressures in nickel and aluminum.
One of the main reasons why LFP batteries aren’t widely used outside of China is due to a number of significant LFP patents that have allowed China to monopolize the industry. However, those patents will soon expire, and Tesla appears to be aiming for that deadline, with executives claiming that the firm plans to transfer LFP battery production to the same sites where it makes its cars. Tesla’s SVP of Powertrain and Energy Engineering Drew Baglino told investors that our aim is to localize all important elements of the cars on the continent at the very least the continent, if not closer, that’s what we’re aiming for. We’re collaborating with our suppliers internally to achieve that aim, not just at the end of the assembly line, but as far upstream as feasible.
Image Source: Solar Reviews
The firm also gave a brief, rather ambiguous update on its 4680 battery pack, a unique cell design it developed in-house. According to Tesla, the 4680 battery will have a higher energy density and range. The 4680, according to Baglino, is on pace to be delivered in cars at the start of next year, with structural testing and validation completed on time. While the business is pleased with the timetable, Baglino cautioned that this is a new architecture and unknown unknowns may still occur. We are comfortable with the design maturity and production readiness matching the pack timeframe I just described from a cell viewpoint, he said.