Tesla announced Wednesday that it will use iron-based battery technology for its Model 3 and Model Y standard models in all global markets. In the third quarter earnings report, Tesla confirmed that Elon Musk, Tesla CEO, had been dropping hints about the growing role of cheaper battery chemistry in its product line-up for months.
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. LFP battery cells offer cost savings and aren't dependent on rare raw materials such as nickel or cobalt. During an investor conference Wednesday, Zach Kirkhorn, Tesla's Chief Financial Officer, confirmed that there have been pricing impacts on nickel and aluminum.
LFP batteries aren't seen outside of China because of a number of important LFP patents that have allowed China to dominate the LFP market.
However, those patents are about to expire and Tesla seems to be focused on that timeline with executives suggesting that Tesla intends to bring LFP batteries production to the same places it makes its cars.
Drew Baglino from Tesla's Powertrain and Energy Engineering, stated that our goal is to locate all the key components of the vehicles on the continent. This is our goal. To achieve this goal, we are working with our suppliers internally.
A brief update was also given by the company on its 4680 battery pack. This custom-designed cell design was created in-house. The 4680 battery, according to Tesla, will have a greater range and energy density. Baglino stated that the 4680 battery will be in vehicles by the start of next year. All structural testing and validation are on time. The company is pleased with the timeline but there may still be unknown unknowns. Baglino said.
We are happy with the design maturity and manufacturing readiness that match the pack timeline, he said.
