Tesla will abandon cobalt in its batteriesFebruary 25, 2020
Tesla is close to a revolutionary agreement – the company wants to use lithium-free batteries in its cars. First they will be equipped with Chinese-made Model 3 electric cars, and then this practice can be expanded to all production sites. Refusal from cobalt will allow the Mask to either sharply reduce the cost of its cars for customers, or significantly increase Tesla’s profit.
Not so long ago it became known that Tesla was going to switch to a new lithium-ion battery electrolyte supplement, which was previously used by the company only in the production of industrial batteries. This technology was first used at the Shanghai factory, where Model 3 electric cars are produced.
Now there is evidence that Tesla may begin to use lithium iron phosphate batteries (LFP), which are much less popular in the automotive industry than nickel magnesium cobalt (NMC). They are characterized by low energy consumption, and they are used only by some Chinese companies. However, the Chinese company CATL is working to increase their capacity and safety.
Negotiations with CATL reached the final stage, reports Reuters. If an agreement is reached, the cost of the battery will decrease by a “double-digit percentage,” said one of the participants in the process, who wished not to reveal his name. Tesla and CATL also refrained from commenting.
The use of LFP batteries will allow Tesla CEO Ilon Musk to keep his promise in 2018 to reduce his use of cobalt “to almost zero”. Now the cost of this most expensive battery component is $ 35,500 per ton.
Reducing the cost of batteries in Tesla electric cars by 10-20% will make them completely unattainable for competitors, despite the fact that even today each battery costs the Mask 25-40% cheaper than the cost of the batteries of its closest competitors. So the cost of sets of cylindrical batteries that are used in Tesla cars is, as recently discovered by meticulous researchers, $ 158 per kWh. While Porsche Taycan and Chevrolet Bolt EV batteries cost $ 200 per kWh, while BMW batteries are even more expensive – up to $ 253 per kWh.
If Musk removes cobalt from his batteries, he can either make more money on each car sold, leaving the pricing policy unchanged, or he can afford to significantly reduce the cost of his electric cars, while maintaining profitability, but selling even more cars.
It is likely that Tesla shares amid a deal with CATL will set a new record for value.
Given the overwhelming advantage also in automotive electronics – according to the Nikkei publication, Musk is at least 6 years ahead of traditional car manufacturers in this area – it is completely unclear how he can compete with him.
Technologies useful for developing new batteries made Ilon Mask spend $ 200 million on Maxwell startup. It is known that he is preparing to launch the production of his own batteries for Tesla. A deal with CATL can be an intermediary in this path.
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