As reported by Reuters, Tesla is in talks with EVE Energy Co. to boost the procurement of LFP batteries. In April, Tesla revealed their plans to have recycling facilities in the Shanghai Giga factory.
Shifting to LFP batteries
Eve makes lithium iron phosphate(LFP) batteries, which are cobalt-free. In recent times various automakers have shown interest towards, like BYD ( A Warren Buffett-backed EV maker).
And Tesla has also shown interest in LFP batteries. However, this is the first time such an alliance has been decided. Because the challenge with LFP batteries is that they have shorter mileage. Tesla is not known to have compromised on features, they wait till they make a better product.
However, Tesla has already partnered with Amperex Technology Co. for the LPF battery supply. Furthermore, it is said that the company is yet to finalize the deal by Q3.
With this deal, Tesla will have two companies supplying batteries. And EVE is already at the final stages of its testing process with Tesla cars.
Contradicting rise in the price of the cars
As the company is working towards making cheaper cars, the prices of their cars are rising with each quarter. The Model 3 now costs $155 (1,000 yuan) more than its original price. As per the reports, it is the first time the prices increased at such a rate in the three years of their entry into the Chinese market.
Tesla’s journey in China is not going as smooth as their sales show. There have been issues with the brand image as customer disputes arose. Yet, they had two cars, Tesla Model 3 and Tesla Model Y in the top-selling EVs list. And the Model 3 already reviewed an award for being environmentally friendly.
Their market in China is competing with local brands which have cheaper costs. While the other models do not provide the required range and capacity, it would be hard to compete without lowering prices in the future. Also, the company is set to prepare for its entry into India. They have been rigorously preparing for their entry on a global scale as well as lower car prices. Which is essential to make it in developing countries.
This alliance with the battery-making company is part of their future plans. Alongside their recycling plant is of added advantage. As recycling, the older batteries are cheaper than making new ones. As the companies denied to comment on the same, we are yet to wait and see how things go.