Tesla to Open LFP Battery Plant in US with CATL Equipment: Report

Tesla Inc. is set to bolster its battery production in Nevada with a new facility in Sparks, NV, incorporating unused equipment sourced from China’s Contemporary Amperex Technology Co. Ltd. (CATL) to produce lithium iron phosphate (LFP) batteries, insider sources told Bloomberg News. Under this arrangement, Tesla will acquire machinery from CATL, ensuring full control and covering 100% of the costs for the facility. According to Bloomberg’s report, CATL personnel will play a minimal role, assisting in the equipment setup.

The plant's primary focus will be producing cells for Tesla’s large-battery Megapack product. This move aligns with Tesla's broader strategy to localize the supply chain for lithium-iron-phosphate cells in the United States.

This strategic decision comes at a time of increased scrutiny by US lawmakers and the Biden administration concerning technology collaborations with China, especially in battery production. Tesla's approach, with CATL having limited involvement, may help mitigate concerns about US companies’ reliance on Chinese partnerships.

While Tesla and CATL have yet to respond to requests for comment, Tesla has already expressed its intention to double capacity at an existing battery factory in Lathrop, CA. This expansion aligns with CEO Elon Musk’s recent statement that Tesla’s energy-storage operations will outpace its electric car business growth this year, particularly with the Megapack serving utility purposes.

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CATL specializes in LFP batteries known for their cost-effectiveness and stability. Unlike CATL's collaboration with Ford Motor Co., where technology licensing for battery production in Michigan is part of the deal, Tesla's arrangement avoids potential scrutiny regarding foreign influence. Tesla's Megapack product already utilizes CATL cells, and the new facility will follow the same battery design.

Bloomberg estimates the plant will have a limited output of around 10GWh, with expansion plans contingent on successful project implementation and supply chain establishment. The facility is expected to become operational by 2025 and could eventually contribute up to 20% of Tesla’s regional battery production, including the Lathrop location.