Tesla Has Locked Deal With CATL For LFP Battery Cells

Tesla has reportedly closed a deal with CATL for the supply of LFP battery cells. CATL is the biggest battery supplier in the world by volume. Tesla has reportedly closed a massive 45 GWh lithium iron phosphate battery cells.

"36 Kr learned from a number of people familiar with the matter that Tesla has booked 45 GWh lithium iron phosphate batteries from China's leading power battery company CATL for next year's sales plan, mainly for Model 3 and Model Y models," said a report from a Chinese publication 36 kr.

Tesla has already announced that its new 4680 batteries use lithium iron phosphate - and this is going to be standard across its range globally. Tesla has been working towards shifting towards LFP cells due to a shortage of nickel.

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Iron phosphate batteries are also cheaper and safer but they have less energy density which can also mean a lower range for EVs. But in recent times, these batteries have improved to a degree that it makes sense to use cobalt-free batteries in lower-end and shorter range vehicles.

In turn, this also means that it frees up battery cell production for more energy-dense chemistries to produce a longer range. Tesla has moved the standard range Model 3 and Model Y to this chemistry starting in units produced in its Shanghai Gigafactory.

The amount Tesla has procured from CATL could allow it to make around 700,000 to 800,000 cars. Tesla reportedly has overall a capacity of producing 1.5 million vehicles in 2022 which could mean that next could be even better for Tesla despite battery cell shortages and a global semiconductor shortage.