Tesla May Buy Large Scale Nickel for Lithium Iron Phosphate Batteries

Tesla may purchase large scale nickel metal for lithium iron phosphate batteries (LFP batteries). The company has officially secured approval to produce and sell a new Model 3 with cheaper LFP batteries in China. Early on, the company adopted its version of the energy-dense lithium nickel-cobalt-aluminum oxides (NCA) battery cell for its electric vehicles, which went against most of the industry who uses nickel-cobalt-manganese (NCM) cells.

Following the announcement of Tesla's (TSLA) financial report for the second quarter of 2020, consecutive quarterly profits and better than market expectations, CEO Elon Musk announced to increase investment in the United States, and under certain conditions, will purchase nickel metal on a large scale, implying greater adoption of lithium iron phosphate battery technology, and reduces reliance on cobalt metal to help to decrease manufacture costs.

Tesla's introduction of lithium iron phosphate batteries is not news. Previously, the company announced that it would cooperate with CATL in China to produce cobalt-free LFP batteries, which will soon be applied to the Model 3 car series produced by the Shanghai plant in China. Elon Musk stated that LFP batteries are the future trend and called on miners to mine more nickel.

At present, most of the company's car models still use ternary polymer lithium batteries, such as 18650 or 21700 battery packs, which use cobalt metal, such as nickel-cobalt-lithium, lithium-cobalt-oxide, nickel-cobalt-manganese, and other cathode material combinations. The price is more expensive, and the quantity is rarer, so it is not conducive to the battery manufacturing.

Although the energy density of lithium iron phosphate batteries is lower than that of ternary batteries, they hold advantages in manufacturing costs, and the disposal of waste batteries in the future is also more eco-friendly. And they are the reason why Tesla is about to develop LFP batteries.

Besides, Elon Musk emphasized that nickel will be the mainstream of battery technology in the future. Therefore, mine traders should mine more nickel metal, while optimizing mining efficiency and developing environmentally friendly technologies. If this is the case, Tesla is about to introduce a large scale of lithium iron phosphate technology for developing lithium iron phosphate batteries.

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