Tesla is expanding its battery production capabilities in the United States as part of a broader strategy to reduce its dependence on China for critical materials, Chief Executive Elon Musk said.
The company is working to internalize nearly all aspects of battery cell manufacturing, including cathode and anode production, lithium refining, electrode coating, and cell assembly, according to a recent investor note from Piper Sandler analyst Alexander Potter. “Tesla is the only car company that is trying to source batteries, at scale, without relying on China,” Potter wrote.
Musk said localizing supply chains is a key priority, warning of the risks associated with sourcing materials and components from abroad. “It is important, albeit extremely hard work, to localize supply chains to mitigate geopolitical risk” he said, referencing geopolitical and economic pressures that could impact companies with exposure to Chinese suppliers.
Tesla has made several moves in recent years to advance its domestic production capabilities. A lithium refinery under construction in Texas is aimed at supplying battery-grade material, while the company is also investing in cathode manufacturing and cell assembly technologies. Partnerships with firms such as Panasonic—currently building a battery plant in Kansas—will also help Tesla access U.S.-made battery cells.
According to a 2023 analysis by Nikkei, 39% of Tesla’s battery cell materials were sourced from China. That figure is expected to decline as new domestic facilities ramp up operations in the coming years.