Electric car (EV) manufacturer Tesla (Nasdaq: TSLA) plans to use iron-based batteries in its semi-light electric trucks and affordable EV models, as outlined in its Master Plan Part 3 paper. . The use of lithium iron phosphate (LFP) batteries, which are generally cheaper than nickel- and cobalt-based lithium-ion batteries, helps the company reduce manufacturing costs.
Transition to LFP batteries for EVs
The use of LFP batteries will also help Tesla address supply issues related to nickel and cobalt, as iron ore is relatively abundant and the cost of extraction and refining is low. LFP batteries are also generally considered more stable and safer as they are less likely to ignite than nickel or cobalt based batteries. However, iron-based batteries are large and heavy. In addition, they generally have less energy than nickel-based batteries, resulting in shorter range.
Tesla plans to use LFP batteries in its Model Y and Model 3 vehicles as well, but no timeline was provided. The company plans to use his LFP batteries with a capacity of 53 kilowatt-hours (kWh) in its planned affordable small electric vehicles, compared to 75 kWh for the Model Y and Model 3.U.S. Model 3 and Model Y vehicles
Major EV manufacturer led by CEO Elon Muskcurrently sources LFP batteries from China-based Contemporary Amperex Technology Co. Ltd (CATL). The majority of LFP battery production is concentrated in China, and ongoing US-China tensions could pose a risk. Additionally, automakers must use North American-produced battery components to take advantage of federal tax credits for EVs.
recently, bloomberg reported that Tesla is considering building a battery factory in the United States, and spoke to White House officials about the same.the source told bloomberg Include CATL in the plan. Tesla appears to want a deal similar to the one announced by Ford (New York Stock Exchange: F) in February.
Ford is working with CATL to build a $3.5 billion new battery plant for EVs in Michigan. However, the company will own the new facility through a wholly-owned subsidiary rather than operating it as a joint venture with CATL. Production at this factory he plans to start in 2026. Ford, meanwhile, plans to introduce his LFP battery in the Mustang Mach E SUV this year and in his 2024 F-150 Lightning electric truck.
In addition to Tesla and Ford, Mercedes-Benz Group AG (MBGAF), Volkswagen AG (VWAGYMore), and Rivian Automotive (Riven) also announced plans to use LFP batteries in some vehicles.
Is Tesla Buy, Sell, or Hold?
Reducing EV production costs through the use of LFP batteries and other initiatives is critical for Tesla, given the increasing competition in the EV space. Meanwhile, Tesla continues to cut prices to stimulate demand. Price cuts this week.
Wall Street is cautiously optimistic about Tesla, with a moderate buy consensus rating based on 19 purchases, 10 holds and 3 sales.average TSLA strain A price target of $219.57 implies a near 19% upside potential, even after a strong year-to-date rally.
![](https://tipranksblog.wpenginepowered.com/wp-content/uploads/2023/04/Tesla-1.png)