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Tesla Looks To Produce Cars In China With New Type Of Battery

Tesla has made a move away from the dominant EV battery technology, asking the Chinese government for approval to start manufacturing Tesla Model 3 featuring a lithium iron phosphate batteries, Reuters reports, citing a document published on the website of the Chinese Ministry of Industry and Information Technology.

Lithium iron phosphate, or LFP, batteries contain no cobalt—one of the more expensive components of EV batteries and the object of ethical mining controversies since most of the world’s supply of cobalt is concentrated in the Democratic Republic of the Congo where child labor is rife.

The new batteries for the Model 3 will likely be produced by CATL, a Chinese battery and technology company, and the biggest EV battery maker globally. CATL sealed a deal with Tesla to supply it with batteries in February, for a two-year period beginning in July this year. Soon after, CATL, which also supplies EV batteries to Audi, Hyundai-Kia, Volvo, and Mercedes, said it would boost its production capacity fourfold, for an investment of $3.7 billion. At the time Reuters reported the batteries CATL will supply to Tesla would be lithium iron phosphate ones.

According to another report by The Driven, the CATL batteries will be cheaper, not just because of the absence of cobalt but also because the battery maker could dispense with the battery modules. Reuters has calculated that the cost of a CATL-made battery pack for a Tesla Model 3 made in China could be $80 per kWh, which is a fifth less than the battery pack price that many assume will make EVs price-competitive with internal combustion engine vehicles.

In March, Tesla set a record in car sales in China despite the coronavirus pandemic, which caused a 40.8-percent drop in total car sales in the locked-down country. The EV maker sold 10,160 cars in China in March, up from just 3,900 a month earlier.

By Irina Slav for Oilprice.com

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