We know that Tesla offers one of the longest-range and most energy efficient electric cars in the world (see a comparison for the U.S. market as of September 2021 here).
The company is quickly expanding its production and sales, while its products are continuously evolving. Last month, Tesla officially announced the switch of all standard range (entry-level) versions of its cars to the Lithium Iron Phosphate (LFP) battery chemistry globally.
You can see an LFP battery used in a Tesla Model 3, presented by Munro Live's Sandy Munro, who visited Our Next Energy here.
The LFP batteries are less expensive than some of the other lithium-ion chemistries, like NCA and NCM, does not use cobalt, offers high-cycle life, fast charging and very good safety. The main disadvantage is lower energy density.
And here is an interesting thing, pointed out by ARK Invest via Sawyer Merritt, that Tesla - through its focus on energy efficiency - is uniquely positioned to be able to widely adapt and profit from the LFP batteries.
"We believe that Tesla’s positioned uniquely for LFP chemistry because of its industry-leading drivetrain efficiency. Superior efficiency suggests that,unlike its competition, Tesla will offer acceptable range at lower prices with LFP batteries."
Tesla can simply use a lower-energy dense battery chemistry in standard range cars, and still provide a decent range, north of 250 miles (402 km).
Other manufacturers might struggle to make such a switch, because their models are not efficient enough (especially if built using general car platforms, not dedicated to EVs).
We can already see it, as many EVs have to have battery packs bigger than Tesla (higher battery capacity) to offer a similar range to Tesla models. It comes at a price (higher weight and cost).
It also limits the options with the LFP packs, because consumers will not necessarily be willing to buy 150-200-mile BEVs.
Manufacturers must achieve a certain efficiency level to be able to adapt LFP batteries to their entry-level EVs and remain competitive. It has its implications, because to improve efficiency, OEMs would have to go all-in, with refined design and probably a lot of vertical integration.
What do you think? Is it a valid point that efficiency improvements are required to unlock LFP to other manufacturers in Europe and North America?