Tesla has announced plans to expand the use of cheaper, iron-based batteries to its Semi heavy electric trucks and an affordable electric vehicle. The world’s biggest electric carmaker will use lithium iron phosphate (LFP) battery technology for “short-range” heavy electric trucks, which it calls “Semi Light,” and proposed small electric vehicles. The move is part of Tesla’s efforts to reduce costs and increase efficiency in its production process.
Elon Musk, Tesla’s Chief Executive, has championed the LFP battery technology dominated by Chinese suppliers, citing the abundance and cheaper prices of iron as a key factor. However, having Chinese suppliers build battery factories in the United States is a challenge because of the U.S.-China political tensions. Tesla currently sources LFP batteries from China’s Contemporary Amperex Technology Co, which does not have a factory in the United States.
Musk and other LFP advocates believe that the advantages of LFP batteries outweigh the drawbacks that have held back their adoption globally. While LFP cells are bigger and heavier and generally hold less energy than nickel-based cells, giving them a shorter range, they tend to pose less of a fire risk than nickel-based cells.
Tesla’s proposed small electric vehicles will use LFP batteries with a capacity of 53 kilowatt-hours (kWh), versus 75 kWh for Model Y and Model 3. Tesla said it will also use LFP batteries in its mid-sized vehicles, Model 3 and Model Y, without giving a timeline. Currently, Tesla uses nickel-based batteries for most of its Model 3 and Model Y vehicles sold in the United States.
Tesla’s decision to expand its use of LFP batteries is a strategic move aimed at cutting assembly costs by half in future generations of cars. The company plans to build these cars at its factories in Mexico and elsewhere, with LG Energy Solution (373220.KS) saying it plans to build LFP batteries at its proposed Arizona factory.
