Close-up of the Tesla logo on a charger at the Supercharger for Tesla Motors in Mountain View, California, Silicon Valley on August 24, 2016.
Smith / Gadot Collection | Archival photos | Getty Images
Tesla is changing the battery chemistry it uses in all of its standard-range electric vehicles to a version with a lithium iron phosphate (LFP) cathode, the automaker said Wednesday in its third-quarter investor report.
The move is likely to be a way for Tesla to increase profits from its all-electric vehicles, without necessarily driving up car prices. Tesla has been criticized in the past for sporadic car price changes.
The company already manufactures cars with LFP chemistry at its Shanghai plant. He sells these vehicles in China, Asia Pacific and Europe.
China generally promotes the use of this type of battery, according to a materials researcher and Roskill consultant… The firm notes that about 95% of LFP cathode production is made in China.
In September, Tesla asked Model 3 armor holders in the US if they would accept a vehicle with a battery made from LFP cells instead of the nickel-cobalt-aluminum (NCA) cells that Tesla previously used on Model 3 sedans sold in North America. …
“The LFP has both positive and negative trade-offs,” said Sam Abuelsamid, principal analyst at Guidehouse Insights. “It is significantly cheaper and does not require nickel or cobalt. It is also more stable, which makes it safer. “
One major drawback: cells are less energy intensive, which means they offer a smaller range for the same weight as other cells. They are more affected by cold weather, Abuelsamid said.
Abuelsamid thinks Tesla’s change “is probably a smart idea because they probably won’t cut prices, so it will likely increase their profits.”
Other automakers such as Ford Motor and Volkswagen have shown interest in battery chemistry for cheaper models, Abuelsamid said. It is also particularly attractive for commercial vehicles, such as commercial vehicles, which do not require a range of several hundred miles, he said.
Snow Bull Capital CEO Taylor Ogan, a longtime experienced Tesla specialist, told CNBC, “LFP batteries are cheaper and safer. With this chemistry, you can charge your car battery up to 100% without worrying about wear and tear in the long term. Another thing is that these batteries are really easy to dispose of. And it is easier for them to buy raw materials from an ethical point of view. This is why iron based batteries are already really China battery and they are all you need for the standard range. cars.”
The two leading manufacturers of these types of battery cells are CATL and BYD. Tesla is already purchasing batteries from CATL, as the companies previously reported.
Tesla did not provide further details on the decision other than a statement from investors that it “is shifting to the chemistry of lithium iron phosphate (LFP) batteries around the world.”
Tesla did not immediately respond to comment.
– CNBC Laura Kolodnaya contributed to this report.