LFP & prismatic battery cells at core of Tesla’s China strategy

In an interesting development for the lithium ion battery industry, Reuters publicly revealed the use of lithium iron phosphate (LFP) cathode cells in Tesla vehicles made in China.

There were a number of different reactions on the back of the commonly mistaken trend that LFP was on the way out and nickel cobalt manganese (NCM) — especially the 811 chemistry — was here to take its market share.

The reality is more nuanced, especially in China.

What Tesla’s LFP move shows is a China-centric strategy to take market share in the world’s biggest electric vehicle market, but one that is unlikely to be replicated outside of its borders.

Interestingly, it also shows more flexibility from Tesla than many thought.

Benchmark Mineral Intelligence can confirm that the standard range Model 3 made in China, for Chinese consumers, will use new prismatic LFP cells tailored for Tesla by CATL — a first for the electric vehicle (EV) manufacturer which has traditionally used 18650 and 2170 cylindrical cells.

Benchmark is pleased to present its analysis and thoughts on Tesla’s strategy within China:

  • Tesla to use LFP cells supplied by CATL for the standard range Model 3s produced within China for the Chinese domestic market.
  • CATL’s LFP battery cells are to be prismatic in form but tailored to the Model 3 pack — a first for Tesla, which has traditionally used cylindrical cells.
  • Tesla to use NCM 811 cells supplied by LG Chem for its long-range Model 3s produced within China for the domestic market.
  • Cobalt has played no part in Tesla’s decision to use LFP cells; the move is a specific strategy to balance the cost reduction of Model 3 with appropriate range and performance for China’s domestic market.
  • LFP-powered Model 3s will qualify for China’s EV subsidies as range estimates with Tesla’s drivetrain efficiency will take it beyond the 250km (155 miles) threshold for the minimum subsidy payout of 18,000 CNY (approximately $2,600).
  • Benchmark estimates that the total cost saving for Model 3 made in the US using NCA cells will be in excess of 25%.