Proactive Investors - Tesla Inc (NASDAQ:TSLA) plans to expand battery production in Nevada, using surplus equipment from one of its existing Chinese battery suppliers, Contemporary Amperex Technology Co Ltd. (CATL).
A small new plant will be opened in the city of Sparks, with CATL assisting with set-up but the electric vehicle (EV) manufacturer taking over to run operations, according to a report from Bloomberg.
Rather than making batteries for Tesla's EVs, the factory will specialise in producing lithium-iron-phosphate (LFP) cells for the company's Megapack industrial energy storage units (pictured).
CATL is the world’s biggest maker of EV batteries and specialises in LFP batteries, which are gaining traction due to being sometimes 50% to 60% cheaper than the NMC (nickel manganese cobalt) alternatives and more chemically stable.
Tesla and Ford have been using LFP batteries for the past few years, with General Motors (NYSE:GM) announcing last year that it will switch to LFP batteries for its Chevrolet Volt.
The reported Megapack deal, involving Tesla's purchase and installation of CATL machinery with minimal involvement from the Chinese firm, underscores a broader effort to onshore critical components of the EV supply chain, which has also been seen in the resources sector for graphite, lithium and other battery metals.
This comes amidst growing scrutiny over US-China technology collaborations, and the Biden administration's push for strengthened domestic supply chains.