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Tesla is Changing the Battery Cell Chemistry in its Standard-Range Models

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【Summary】The new batteries use a lithium-iron-phosphate (LFP) chemistry instead of nickel-cobalt-aluminum, which will continue to be found in Tesla’s long-range models.

Original Vineeth Joel Patel    Oct 24, 2021 4:45 PM PT
Tesla is Changing the Battery Cell Chemistry in its Standard-Range Models

For automakers, it's all about making money by selling cars. Tesla just recently started to make a profit on its vehicles and it wants to keep things going. Instead of raising the prices of its vehicles, which Tesla tends to do sporadically, the automaker is moving to change the batteries that are found in its Standard Range models. This move is a good way for Tesla to increase its profit margins without changing the prices of its vehicles.

LFP Standard Range EVs Coming

Tesla recently announced that all of its Standard Range models will switch to using a lithium-iron-phosphate (LFP) cathode. The announcement was made in the automaker's third-quarter earnings release. Tesla already sells Model 3 sedans in China with LFP batteries. Apparently, LFP batteries are far more affordable for Tesla to use and lower production costs. So, after seeing how much money it saved in China, Tesla has decided to make the switch globally. The move to use LFP batteries, though, does result in less range.

While pricing is one of the major factors for the switch to use LFP batteries, another reason could be environmentally related. LFP batteries require fewer rare-earth minerals like cobalt, nickel, and manganese. Nickel has become a difficult material to find and EV manufacturers need a lot of the material. Supplies of nickel have started to become tight as automakers attempt to get the product in mass quantities.

"LFP has both positive and negative trade-offs," Sam Abuelsamid, Guidehouse Insights principal analyst, told CNBC. "It's significantly cheaper and doesn't require any nickel or cobalt. It's also more stable, which makes it safer." There are many other upsides to LFP batteries, too. They don't degrade as quickly as other batteries and are easier to recycle.

Positives And Negatives

All of this makes LFP batteries look like a major upside from Tesla's point of view. Unfortunately, for consumers, the battery means less range. LFP battery cells are less energy-dense than nickel-cobalt-aluminum battery cells, which results in less range despite weighing the same amount. Another issue with LFP batteries is that they're more easily affected by cold weather, claims Abuelsamid.

For its vehicles made in China with LFP batteries, Tesla has been sourcing them from Contemporary Amperex Technology Co., Limited (CATL) which is the world's largest battery producer. Another company that's well known for making LFP batteries is BYD. CATL is based in China and is partly responsible for why 95% of LFP cathode manufacturing is produced in the country.

At the moment, the Model 3 Standard Range Plus model has a range of up to 262 miles and is priced at $43,490 with destination. Going forward, we're not sure how the switch to LFP batteries will affect the electric car's range or price. The automaker's Long Range models and, supposedly the Cybertruck if it ever comes out, will continue to use nickel-cobalt-aluminum batteries.

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