Tesla CATL Model 2 25000 EV Adoption
“Westernization” of Chinese battery tech is one way foreign battery companies can still cash in on America’s new appetite for cheap EVs
Cheap EVs are so hot right now. As America begins to enter its electrified era, consumers are beginning to see EVs become more affordable—but the prices are nowhere near what’s debuting in the Chinese market.
So when Tesla announced that it was working to prepare a $25,000 EV, both consumers and investors went berserk. Only one question remained: how will Tesla pull that off? At least one part of that complex answer appears to revolve around using battery tech supplied by Chinese energy giant, CATL.
Recent news indicates that CATL is supplying battery tooling to Tesla’s Gigafactory in Nevada as part of a deeper partnership between the two companies. Rather than import battery modules or use the raw materials sourced by CATL, it is speculated that Tesla will instead lease the tooling from the Chinese company and collaborate on new battery chemistries. Robin Zeng, chairman of CATL, confirmed to Bloomberg that the companies are already working on new electrochemical structures that would allow for faster battery recharging.
The model could potentially allow Tesla to produce more advanced battery cells at a low price point and ensure that CATL still has its claws in the Western market without actually needing to export batteries to the U.S.
There’s always room for cost reduction depending on what the $25,000 car’s aim is. If it’s for robotaxis, we don’t have to worry about the cost reduction for each cell as our batteries have a longer life cycle and so their average cost is actually lower.
Tesla already has a long-standing partnership with CATL for its made-in-China vehicles, as well as the Model 3 Standard Range vehicles built and sold in the U.S. Unfortunately, the cost benefits of the partnership likely feel some strain given the changes to the U.S. EV tax credit.
The EV tax credit hasn’t been the easiest topic for consumers to digest. Complex and changing requirements have led to confusion amongst EV buyers, but one thing is glaringly apparent: the protectionist requirements for a vehicle to be eligible for the tax credit.
CATL is one of those foreign battery manufacturers hit hard, as battery sourcing requirements have resulted in various domestic and foreign automakers reaching the ultimatum of choosing between CATL-sourced batteries, or their vehicles qualifying for the $7,500 federal EV tax credit.
Get the InsideEvs Newsletter Sign Up Today
Tesla’s approach of leasing CATL’s battery tooling and design is an approach that seems to transcend the limitations put in place by the EV tax credit. Battery materials are sourced and assembled within a preferential country, alleviating the protectionist requirements set by the tax credit.
“CATL is in talks with around 10 to 20 other automakers in the US and Europe regarding a similar arrangement,” noted Zeng.
Adam Jonas, Head of Morgan Stanley’s auto and space research, speaks to how Tesla’s workaround could represent a breakthrough in how Chinese battery companies can break into the U.S. market:
We’ve long writtean about the need for the U.S. to engage with (‘on-ramp’) Chinese EV technology to drive higher EV penetration. In our view, this will require a degree of ‘westernization’ of Chinese tech to be palatable in the U.S. given the rising protectiost sentiment.
[…]
In our view, Tesla is in a very strong position to ‘on-ramp’ Chinese EV tech to the US. In leveraging Chinese manufacturing know-how, Tesla can deliver a $25,000 EV (Model 2) and drive EV adoption in the US.
While CATL is looking to continue its global dominance in the EV battery market, the U.S. has become increasingly worried that other Chinese automakers will attempt to break into the States by building factories in neighboring countries with preferential trade agreements. Several lawmakers have called for a review of the United States-Mexico-Canada Agreement to protect against what some have called an “extinction-level event for the U.S. auto sector.”
It would seem that CATL’s model could be a good compromise to help automakers build more advanced and affordable batteries at a lower price while discouraging market penetration from foreign automakers that circumvent protectionistic tariffs. And if Tesla can use that framework to build its $25,000 EV, it means domestically-produced EVs will be more affordable than ever.
More Politically-Charged Battery News
-
Pedestrian in his 70s dies after being struck by a lorry in Co Laois
-
Vermont shooting updates: Burlington police reveal suspect’s eerie reaction to arrest
-
Grace Dent says her ‘heart is broken’ as she exits I’m A Celebrity early
-
Stromer’s ST3 Urban E-Bike Goes Fancy With Minimalist Design, Modern Tech
-
Under-pressure Justice Minister announces review of the use of force for gardaí
-
My appearance has changed because of ageing, says Jennifer Lawrence
-
Man allegedly stabbed in the head during row in Co Wexford direct provision centre
-
Children escape without injury after petrol bomb allegedly thrown at house in Cork City
-
Wexford gardai investigating assault as man is bitten in the face during Main Street altercation
-
Child minder’s husband handed eight year sentence for abusing two children
-
The full list of the best London restaurants, cafes and takeaways revealed at the Good Food Awards
-
Mazda CEO Says EVs 'Not Taking Off' In The U.S.—Except Teslas
-
Leitrim locals set up checkpoint to deter asylum seekers
-
Ask A Doctor: Can You Get Shingles More Than Once?