Tesla to Make Adjustments in China As the Automaker Plans to Move LFP Battery Production to North America
Elon Musk is planning a visit to China, while Tesla is making preparations to move LFP battery production to North America.
A breaking Reuters report revealed that Elon Musk intends to visit China next month in order to secure a meeting with China Premier Li Qiang.
It’s not known at this point what the purpose of the meeting will be; however, Giga Shanghai has been an increasingly important facility for the automaker since it opened in 2019.
Musk hasn’t been to China since pre-Covid in 2020.
Meanwhile, Tesla is reportedly planning to produce lithium-iron phosphate batteries in North America through a partnership with the leading Chinese battery manufacturer CATL.
This move is in response to battery sourcing/production guidelines disqualifying Model 3 RWD from receiving the full $7,500 tax credit beginning today due to its use of a LFP battery produced in China.
Real Talk
Musk’s trip to China is likely situated around Tesla’s sales in the country, which are being overtaken in the marketplace by Chinese automakers including BYD.
BYD owns 40% of the electric car market in China, while Tesla has just under 8% of the total marketshare.
At the same time, Tesla will be forced to reduce its reliance on China for battery materials and production as a result of stringent guidelines disfavoring countries that lack Free Trade agreements.
This only affects Model 3 RWD, and we are pleasantly surprised that Tesla is already considering swift steps to move LFP battery production to North America as they are well-suited to ‘Standard Range’ equivalent vehicles.
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