Tesla pursues building new US plant with China’s dominant battery-maker
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Tesla wants to pursue a deal similar to one that Ford Motor announced last month with Chinese battery-maker CATL.
PHOTO: REUTERS
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Detroit – Tesla is looking to build a battery plant in the United States, according to people familiar with the matter, in what will likely be a controversial arrangement with China’s dominant battery manufacturer for electric vehicles (EVs).
Tesla discussed plans involving Contemporary Amperex Technology Limited, better known as CATL, with the White House in recent days, said the people.
Tesla wants to pursue a deal similar to one that Ford Motor announced last month in Michigan with the Chinese battery-maker to construct a plant wholly owned by the US automaker, according to the people.
Tesla is in expansion mode, deploying its US$22 billion (S$29 billion) in cash to crank up production volumes and lower costs as it faces increased competition. CATL, which makes lithium-iron-phosphate batteries, a chemistry that is cheaper than the nickel-based batteries used in the West, is key to that plan.
The US automaker is considering building the battery plant in Texas to supply its EV assembly plant there, although a location has not been finalised, some of the people said. Like the Ford deal structure, Tesla will own and operate the factory while licensing the technology from CATL.
The auto industry has been lobbying to influence how the US Treasury Department will interpret requirements in President Joe Biden’s signature climate package. The law is intended to wean the US off its dependence on China for battery materials by incentivising a US-based supply chain for EVs. One specific clause, which has been the object of intense lobbying, is designed to withhold consumer tax credits for EVs made with a certain amount of China-linked materials in their batteries.
Ford’s deal has provoked ire from lawmakers including Democratic Senator Joe Manchin and Republican Senator Marco Rubio, who argue that it allows the Chinese company to benefit from US subsidies. Ford has said CATL will not receive any US tax dollars from the deal.
Barclays analyst Dan Levy said in a research note that Tesla may get some political pushback against a deal with CATL, similar to what Ford has seen. BLOOMBERG
