Tesla pursuing co-building new US battery plant with CATL

Tesla is considering all its battery supply options to power its planned massive expansion. One of them is teaming up with the biggest battery maker CATL to build a battery plant in the US, according to a report by Bloomberg.

Tesla has reportedly discussed the plan with the White House. The American EV maker sought clarity on the government’s position on the partnership as the new Inflation Reduction Act might have a bearing on it. According to people with inside knowledge, Rohan Patel, Tesla’s senior global director of public policy, was involved in the discussion.

Tesla plans to skirt any controversy from working with a Chinese company by toeing the same line as Ford. The legacy automaker came up with a complex arrangement to work with CATL by wholly owning the entity that makes the battery plant. This means Tesla will, in theory, only be licensing CATL’s technology.

Meanwhile, there has been pushback from lawmakers who argue that Ford’s deal allows CATL to benefit from the US subsidies. However, Ford has assured that the Chinese company would not receive tax dollars through the deal.

The Elon Musk-controlled EV manufacturer is expanding rapidly, spending its $22 billion cash reserve on increasing production capacity and reducing costs to fend off the competition. The latter reason makes CATL an attractive partner as the battery giant makes lithium iron phosphate batteries cheaper than the nickel-based options more popular in the West.

It is reported that the battery plant with CATL might be situated in Texas.

CATL will soon start making a new battery known as M3P.

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