Tesla reportedly plans to open a new battery manufacturing facility in Sparks, Nevada, which will produce lithium-iron-phosphate (LFP) batteries for use in its energy storage products, including the Megapack.
According to a report from Bloomberg, citing sources familiar with the plans, Tesla will purchase equipment from battery supplier Contemporary Amperex Technology Co. Ltd. (CATL), and is intended to bring production of LFP cells to North America from China, reducing the company’s reliance on international supply chains for critical components.
The Sparks facility is expected to start with an initial capacity of around 10 gigawatt-hours (GWh), with plans for expansion based on the project’s success. This new plant, alongside Tesla’s existing Megafactory in Lathrop, California, which is set to double its capacity to 40 GWh this year, will support Tesla’s energy-storage operations, which according to the company will experience more rapid growth than its vehicle business this year.
The decision to bring production to North America comes amid increasing scrutiny from US lawmakers and the Biden administration over partnerships with China. By purchasing equipment from CATL and operating the facility independently, without ongoing involvement from CATL personnel beyond initial setup, Tesla aims to navigate around the complexities of US-China trade relations while also bolstering its production capabilities.
This allows Tesla to avoid potential criticism regarding US companies’ dependence on Chinese partnerships, especially in sectors deemed critical for national security, such as battery production. Ford faced such scrutiny last year after announcing plans to build a $3.5 billion LFP plant in the US in partnership with CATL.
Tesla’s plan to bring part of their LFP battery supply chain to the US also comes at a time when local sourcing is required for electric vehicles (EVs) to be eligible for the federal tax credit through the Inflation Reduction Act. Although it is unclear from Bloomberg’s report if Tesla will also use LFP cells produced in this new facility in its EVs.