When Reuters anticipated that Tesla would buy LFP – lithium iron phosphate – batteries from CATL in China, we soon jumped in to clarify these would be prismatic cells applied to the entry-level Model 3 made at Giga Shanghai. On May 14, Reuters published another article talking about the million-mile battery that should be the star of Tesla Battery Day. Elon Musk just postponed it again, but there are many points in Reuters' article that deserved our attention. They can lead to inaccurate conclusions this text aims to avoid.
The first point is that it says Tesla will sell in China a "low-cost, long-life" new battery next year on the Model 3 made there. The prismatic LFP cells fit that description, but Reuters states that these batteries are "designed to last for a million miles of use." This may give readers the impression that the LFP CATL batteries are the "million-mile" cells Tesla intends to produce on its own. That is not the case.
The "million-mile" batteries use very different chemistry, as we already mentioned when the first patents emerged. They will be perfected NMC cells – or Lithium Nickel Manganese Cobalt Oxide batteries.
The article also says Tesla has a fleet of 1 million electric cars around the world, which are "capable of connecting to and sharing power with the grid" as an example that the company intends to become an electricity provider. Unfortunately, that is not correct. Tesla vehicles cannot deal with smart grids. In other words, they only take energy from outlets, not give it back.
We believe that capability is not available because it affects the battery pack's lifespan. Every time a completely charged battery fully delivers its energy, we have a cycle. Battery longevity is calculated in terms of these charging and discharging cycles.
Tesla quite possibly decided not to deal with smart grids precisely because that could affect battery pack durability and have warranty implications. With a "million-mile" battery, that issue would be a lot less concerning. Applied to grid energy storage alone, a bunch of them could endure for two decades. That is why it is so strategic to the company.
Reuters mentions CATL was a partner in the development of this "million-mile" battery, but that would not make sense. Tesla invested in research, with a long-term partnership with Jeff Dahn and his team. It also bought Maxwell and Hibar Systems to produce it, as well as equipment from Hanwha. Why would Tesla get CATL involved? CATL and Tesla have worked together, but that was likely only on the LFP batteries for the entry-level Model 3. We have the impression the article mixed the two technologies here once again.
Another indication that this is the case is that it informs the new batteries "will rely on innovations such as low-cobalt and cobalt-free battery chemistries." LFP is naturally free of cobalt. NMC cells – the ones supposed to be the "million-mile" batteries – use that metal.
Perhaps Tesla's agreement with CATL includes having it produce both the LFP batteries and "million-mile" NMC cells for the Chinese market. These puzzle pieces would only fit together if the American company did not have the skills to produce them itself. We have already mentioned all steps Tesla has taken to get there.
If Tesla manufactures its own "million-mile" batteries in Shanghai, it can even compete with CATL in its home market. CATL's CEO, Zhou Jia, does not believe that, but he also said Tesla wants to make its batteries.
As Bob Lutz keeps saying, Tesla currently relies on cells that all other manufacturers can buy. It may manage them in a way no one else still can, but others will learn. Sandy Munro's business is precisely to make that learning easier. What Tesla needs is a real edge in battery technology. Something only Tesla can offer to its customers. Why would it allow any other battery manufacturers to understand how it works?
CATL has a vital role for Tesla in China. Its LFP batteries are cheaper and safer due to its chemistry. Benchmark Mineral Intelligence estimates they cost more than 25 percent lower than the current Standard Range battery pack. BYD and its Blade Battery also bet on the LFP chemistry, as the Han sedan and now the Song Plus EV show.
CATL's cell-to-pack technology takes care of increasing its energy density – the main downside of that chemistry – by integrating the cells directly into the pack. Battery packs usually incorporate the cells into a module and then put those modules into a pack, something that increases weight and consequently lowers energy density.
When Tesla finally decides to have its Battery Day – either online or in any place – it will probably also mention the CATL LFP batteries. Still, we have strong reasons to believe they have nothing to do with the million-mile battery. Only Tesla will be able to confirm or deny that when it is ready to do so.