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Tesla and CATL Enter Advanced Stages of Talks Over Cobalt-Free Battery Supply

By Ding Yi / Feb 19, 2020 05:55 PM / Business & Tech

Photo: VCG

Photo: VCG

Tesla and China’s Contemporary Amperex Technology (CATL) are in the advanced stages of negotiations that may see the U.S. electric car maker use the latter’s cobalt-free batteries in vehicles built at the U.S. automaker’s Shanghai factory, Reuters reported Tuesday, citing sources familiar with matter.

Cobalt is an expensive mental. The use of cobalt-free batteries, also known as lithium iron phosphate (LFP) batteries, could help Tesla lower its production costs in China, where sales of new energy vehicles suffered a sharp drop of 54.4% in January amid the novel coronavirus outbreak.

A source told Reuters that LFP batteries will be “double-digit percent” cheaper than Tesla’s existing batteries, saying that the two firms have been trying for more than a year to reach an agreement.

LFP batteries are typically less energy-dense than nickel-cobalt-aluminium (NCA) and nickel-manganese-cobalt (NMC) batteries, the two types of batteries that electric vehicle makers usually install on passenger vehicles. A battery with higher energy density enables an electric car to run farther on a single charge.

The sources revealed to Reuters that CATL has been developing a technology to boost the energy density and safety of its LFP batteries, adding that Tesla has no plans to stop using its NCA batteries.

The news comes more than two weeks after CATL announced a two-year battery supply agreement with Tesla. But the Chinese battery maker did not specify which kinds of batteries it will provide to Tesla.

Tesla, which is betting big on its Shanghai-made Model 3 sedans to win China market share, also buys batteries from Japan’s Panasonic and South Korea’s LG Chem.

Contact reporter Ding Yi (yiding@caixin.com)

Related: Chinese Battery Maker CATL Confirms Partnership with Tesla


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