Tesla & CATL Battery Rumour Explained


Basically we have rumors heating up
from a leaked source – apparently inside Tesla – telling Reuters and
just to caveat this, like, this is not official Tesla news. Tesla has not
confirmed this. And Tesla, you know, there’s been times in the past where
Reuters has been leaking stuff and it’s just been false and so it’s important to
keep that in mind. But it looks like someone from inside Tesla has been
leaking to Reuters saying – we’re about to sign this deal with CATL, use these new
cobalt free batteries. It’s not a lithium-ion cell. It’s a lithium
ion phosphate type of battery that is currently super widely
used in China but it’s just much shorter range, less energy dense so nobody
thought Tesla would ever use it but now they are using it because was this
breakthrough of cell to pack technology. Lining up with what Elon said. No
modules. This new cell chemistry also happens to have no cobalt. It also
happens to – and pricing wise I think is it another huge layer to all this where
they say it could be a double-digit percent price decrease for the battery
pack. And all of this is gonna, you know, all this new technology, this new battery
pack, basically cheaper, a little bit older technology but with the new cell
to pack, with no cobalt is gonna be in the made in China Model 3 and that is
what they’re gonna use for those local.. – like Tesla keeps talking about how
they want to get all these local suppliers for the Model 3. That’s when
margins will really hit their stride. So now it seems like, until this point,
they’ve been importing battery packs from Panasonic in Nevada and using LG
Chem to supply the battery packs for Gigafactory Shanghai but the long-term
real sort of steady state plan here is to partner with CATL and use this
lithium ion phosphate technology. So my thoughts at a high level here are, wow! I
was totally not expecting this. Totally out of left field. To see Tesla use
this totally different type of battery technology is very surprising but then
when you dive into – okay they didn’t actually need more range. They didn’t
need to make it more dense. And the cost reduction. It actually makes a lot of
sense for at least the cheaper Model 3 for now. And the other big layer to
this is, I think a geopolitical layer, to some degree, which is CTL is a Chinese
company, relative to Panasonic and LG Chem which are not and so I think you
know, Tesla has been getting this royal treatment in China. Building their
Gigafactory from the ground up in less than a year, getting all these amazing
incentives. The government just, you know, is providing really cheap financing
for the factory, seems to be very onboard with Tesla and China and I think sort of
a quid pro quo like trade off for that could be, you know, Tesla is using
Chinese suppliers to build the batteries and that helps the Chinese economy. That
helps them perfect the electric vehicle technology. Which is something that China
really wants to get down. China’s becoming a bigger and bigger importer of
foreign oil. I think this is something that they want to get rid of as soon as
possible and instead of investing in like, their own oil or the internal
combustion engine – they are clearly seeing the future as the electric
vehicle platform and EV’s. So China is going all-in and wants to get really
good at building electric vehicles. So by letting Tesla in, they’re accelerating
their own green movement, helping their main battery company CATL with this
mega supply deal that’s not only going to give them a huge amount of revenue
and be tied in with Tesla, you know, that’s an amazing business opportunity
but it’s going to give CATL expertise in building these next-generation
battery cells which could be used for other long-range EV companies in China
in the long run.

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