According to Bloomberg, Tesla is reportedly in talks with Chinese battery giant CATL to build a battery factory in the US. The facility will be similar to the one CATL recently built with Ford in Michigan. Tesla representatives have already discussed their plans with the US government, seeking clarity on the Inflation Reduction Act rules that the government is finalizing this week. Rohan Patel, Tesla’s senior director of global public policy, was involved in these discussions.
Tesla is said to be planning to build a plant wholly owned by it in partnership with CATL, with Texas being considered as a potential location. This plant will supply the electric vehicle assembly plant located in Texas. As per the deal structure, Tesla would own and operate the plant, while licensing technology from CATL, similar to the deal structure Ford announced last month.
Tesla is expanding its operations, deploying its $22 billion in cash to boost production and cut costs as it faces increasing competition. CATL, on the other hand, produces lithium iron phosphate (LFP) batteries, a cheaper chemistry than the nickel-based batteries used in Western countries. This makes CATL an essential partner for Tesla’s plans.
CATL is the world’s largest maker of electric vehicle batteries, with a 33.9% market share, far ahead of other peers. The company’s installed battery volume in January-February was 25.5 GWh, up 34% from the same period last year, according to data released by SNE Research.
If the deal goes through, it will be a significant milestone for Tesla, which will gain access to a new, cheaper battery chemistry while also strengthening its domestic battery production capacity. The move will also help Tesla reduce its dependence on its current battery supplier, Panasonic, and provide it with a greater degree of control over its battery supply chain.
