Tesla is set to increase its battery production capabilities in Nevada by opening a new facility, utilizing equipment from China’s Contemporary Amperex Technology Co. Ltd. (CATL), as per sources familiar with the situation, reports Bloomberg.
The electric vehicle manufacturer plans to acquire machinery from CATL and install it in Sparks, Nevada. These individuals, who requested anonymity, revealed that Tesla would independently manage and finance the facility, with CATL’s role limited to assisting in setting up the equipment.
This new plant is expected to produce cells for Tesla’s high-capacity Megapack product and represents a strategic move to localize the supply chain for lithium-iron-phosphate cells in the United States. One of the sources mentioned that Tesla views this equipment purchase as a cost-effective approach to establishing new production capabilities.
The decision comes at a time of increased scrutiny by U.S. lawmakers and the Biden administration over technological collaborations with China, particularly in battery production. Tesla’s approach, which minimizes CATL’s involvement, may help mitigate concerns about U.S. companies relying heavily on Chinese partnerships.
In addition to the Nevada expansion, Tesla has announced plans to double the capacity of its existing battery factory in Lathrop, California. These developments align with CEO Elon Musk’s recent statement that Tesla’s energy-storage business is poised to grow more rapidly than its electric vehicle segment this year.
CATL, a leading player in the electric vehicle battery market, specializes in the production of LFP batteries, known for their affordability and stability. However, China’s electric car market is expected to experience a slowdown in 2024, influenced by the country’s uneven economic recovery post-pandemic.
Tesla’s latest move marks a contrast to CATL’s agreement with Ford, which involves licensing CATL’s technology for battery production in Michigan. This project has faced scrutiny from Republican lawmakers concerned about potential Chinese government influence.
The initial output of Tesla’s new facility is projected to be around 10GWH, with plans for expansion contingent on the project’s success and supply chain establishment. The plant is not expected to be operational until 2025 and could eventually contribute to approximately 20% of Tesla’s regional battery production, including the output from the Lathrop site.