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Tesla Purchases Idle CATL Equipment to Build Battery Production Line in U.S.

iconFeb 2, 2024 18:42
Tesla plans to expand its battery production in the US state of Nevada, where it will open an LFP line using idle equipment from China's Ningde Times. This strategy suggests that Tesla ...

According to Bloomberg, Tesla is planning to expand its Gigafactory in Nevada, an expansion that differs from earlier planned expansions at the plant. Tesla wants to add production lines for LFP batteries at the plant and bring the supply chain associated with them to the United States.

Tesla will select its partner and supplier, China-based CATL, to purchase idle equipment to build the line and produce the batteries, with a planned initial capacity of 10GWh per year. Tesla will take full ownership of the facility and bear all costs. CATL and its employees will not be involved in any part of the project, except for the initial installation and commissioning of the equipment.

SMM believes that the implication behind this move is profound. As the industry's leading manufacturer of batteries and electric vehicles, Tesla's choice to buy unused equipment from its partners signals its eagerness to build capacity as quickly as possible. Inflation-cutting legislation that excludes subsidies for components from China came into effect this year, and localisation requirements have been rising every year. In the short term, the choice to buy second-hand equipment is a reluctant but practical option.

Tesla's popular affordable Model 3 compact sedan is temporarily ineligible for subsidies in 2024 because the battery components come from China. With this being an election year, likelihood of the relevant policies easing restrictions is almost non-existent. Against the backdrop of expansions by other OEMs that enjoy or will soon enjoy eligibility, this idle new expansion is a good strategy to restore subsidy eligibility and retain the vast North American market.

In addition, to take the second-hand equipment purchases and the establishment of production capacity of mature technology products strategy, but also the United States companies again to test the federal government on the extent of China's intention to impose restrictions in this area of the initiative. SMM reported earlier that Ford's technical cooperation with CATL in its Michigan factory was brought to the federal government by members of the House of Representatives, casting a shadow over the cooperation model of "US-funded factories with technology provided by China". If the construction of Tesla's second-hand production line goes smoothly, it could open up a new viable path for US electric car companies.


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