Tesla Switches to Cheaper Batteries Due to Expensive Raw Materials

Tesla is switching to cheaper batteries because of the high prices for raw materials used in regular batteries, the electric car manufacturer said during the presentation of the quarterly figures.


Instead of batteries made of nickel and cobalt, Tesla will use so-called LFP batteries for the cheaper Tesla models. These lithium iron phosphate batteries are cheaper and more stable than other alternatives.

Tesla does not make batteries itself but gets them from other manufacturers. In China, for example, Tesla is already getting LFP batteries from China’s largest battery maker Contemporary Amperex Technology. Moreover, this type of battery is getting more and more powerful.

As a result, more and more models of electric cars can use the LFP battery. For the models that require more power, such as the Cybertruck, Tesla still wants to use nickel as a raw material for the battery.

Tesla is suffering from high nickel prices, said chief financial officer Zach Kirkhorn. In a conversation with investors, he indicated that the higher commodities prices are passed on to Tesla. “It’s not a big amount, but it’s not small either,” said the finance chief.

Recently, commodity prices have risen due to the economic recovery. Tesla hinted last month about a possible switch to other batteries for the cheaper Tesla models. Musk spoke earlier about the tight supply and the rising price of, for example, nickel.

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