Tesla Shifts Battery Strategy as It Seeks U.S. Tax Credits

The Wall Street Journal2022-09-15

Tesla Inc. is pausing its plans to make battery cells in Germany as it looks at qualifying for U.S. electric vehicle and battery manufacturing tax credits, people familiar with the matter said.The ...

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Comments

Pigmonkey
2022-09-15
Pigmonkey
Ok
- Pigmonkey:
  Ok
DailyTrader7
2022-09-15
DailyTrader7
Musk working his magic
MSTAN
2022-09-15
MSTAN
👌👌
Bull1973
2022-09-15
Bull1973
Ok
dcTrade
2022-09-15
dcTrade
Rocket to the moon
- CoinYeye:
  nic3
LEESIMON
2022-09-15
LEESIMON
ok

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In the days after the bill became law, the company told Texas officials that it was scouting regional sites for a plant that would refine lithium, a key battery input that today is mostly processed in China.The shift in Tesla’s battery strategy comes as energy costs in Europe have soared as a result of Russia’s invasion of Ukraine, weighing on manufacturing businesses.Sham Kunjur, General Motors Co.’s executive director for EV raw materials, said discussions with outside companies to build out a U.S. battery supply chain have heated up since the law took effect.“Our thought process was that we would do this over a period of time, but with the IRA, we are actively working on figuring out how to accelerate,” he said. GM in the past year has invested in companies and struck long-term deals to secure future supplies of lithium, cobalt and other battery materials.Today, the U.S. plays a relatively small role in making the lithium-ion batteries that power EVs, and a smaller one in producing the raw and intermediate ingredients that compose battery cells. For example, China processes more than two-thirds of all nickel and cobalt globally, compared with 1% or less of each mineral for the U.S., according to research firm Benchmark Mineral Intelligence.Among those incentives is a $35 per kilowatt-hour credit for U.S.-made battery cells. The law also affords $10 per kilowatt-hour for domestically produced modules, or collections of cells, and additional assistance for companies making raw and intermediate battery materials in the U.S.If all of those production credits applied, a 75 kilowatt-hour battery pack such as those used in the long-range version of Tesla’s Model Y compact sport-utility vehicle could see its cost drop by nearly 40%, according to Bernstein Research.Tesla and one of its cell suppliers, Panasonic Holdings Corp., share a Nevada battery factory and are likely to be among the biggest early beneficiaries of those battery production incentives, analysts said.Tesla also has been trying its hand at manufacturing cells in-house, an effort designed to reduce the cost of a key component and mitigate the risk of battery shortages. The company has been producing those new, larger cells at a pilot facility in Fremont, Calif., and had been planning to do so at its factories in the Austin area and outside of Berlin.Tesla Chief Executive Elon Musk has long discussed the importance of boosting cell supply, saying recently that “lithium batteries are the new oil.”Traditional car makers, including GM and Ford Motor Co., also are expected to benefit from the tax credits as they race to open new battery factories through joint ventures with Korean cell manufacturers.“It almost seems too good to be true from a battery maker’s perspective,” UBS analyst Tim Bush said of the production credits.‘It almost seems too good to be true from a battery maker’s perspective.’— UBS analyst Tim Bush said of the production tax creditsGM and its partner, LG Energy Solution Ltd., started battery-cell production last month at a plant in Ohio, and have two more factories in the works. Ford’s joint venture with SK Innovation Co. Ltd. is planning two battery factories in Kentucky and one in Tennessee. And last month, LG and Honda Motor Co. said they plan to build a $4.4 billion battery factory in the U.S., targeting mass production by the end of 2025.It couldn’t be determined how battery cell-makers and auto giants will divide the rewards of the production tax credits, or how much may get passed onto consumers in vehicle pricing.RBC Capital Markets in a research note this week said the tax credit for U.S. battery production could deliver $3 billion to GM in 2025, if the company hits its goal of selling one million EVs in North America that year.It is also likely to be easier to qualify for the production credits than it will be for consumers to receive the $7,500 tax break, which has been in place since 2009, said Mr. Kunjur, the GM executive. That is because the climate law essentially disqualifies from the consumer tax break vehicles that get battery raw materials or components from China, which dominates the supply chain. The production credits have no such 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