On January 31, Bloomberg reported that Tesla is expanding its battery factory in Sparks, Nevada, to introduce a lower-cost Lithium Iron Phosphate (LFP) battery supply chain to the United States.
According to the report, Tesla plans to purchase idle equipment from its Chinese battery supplier, Contemporary Amperex Technology Co. Limited (CATL), to produce batteries. The initial capacity of the factory is reported to be around 10 gigawatt-hours (GWh). Tesla, the Nevada Governor's Office of Economic Development, and CATL did not immediately respond to requests for comments from the media.
Tesla's move to bring the LFP battery supply chain to the U.S. is driven by regulations in the country that prohibit companies from relying on countries like China for the procurement of battery materials such as nickel, cobalt, and lithium.
In 2024, Tesla's lowest-priced model, the compact electric sedan Model 3, lost eligibility for tax incentives under the "Inflation Reduction Act" due to the implementation of new regulations related to battery material procurement.
Currently, the world's largest LFP battery manufacturers are based in China, including BYD and CATL, both of which supply batteries to Tesla. Panasonic, in collaboration with Tesla, also jointly produces batteries at the Gigafactory in Nevada. Both companies have previously invested in production equipment, allowing the Japanese supplier to manufacture and supply battery cells to Tesla.
