Tesla is reportedly in talks with China’s EVE Energy Co to supply cheaper batteries for its regular-range vehicles.
Four unnamed sources spoke to Reuters, saying that EVE is working with Tesla to get its batteries up to the American automaker’s standards. One source said the companies might be ready to roll out the batteries in the Model 3 and Model Y within the next six months.
EVE already supplies batteries for China’s Xpeng Inc, which produces EVs, and has reportedly established supply deals with BMW and Daimler.
The company produces lithium iron phosphate (LFP) batteries. The iron in their chemical makeup makes them cheaper than Tesla’s current batteries, which tend to use nickel or cobalt. With that reduced price, though, comes reduced range.
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Tesla’s CEO, Elon Musk, said the company would shift its standard-range cars to iron anode batteries. The reasons given were concerns about nickel supply, but the sources said that the automaker’s deal with EVE could also be a check and balance on its current battery suppliers. Tesla gets its batteries from China’s Contemporary Amperex Technology Co and South Korea’s LG Chem for its Chinese-made cars.
With more and more manufacturers, including established automakers like GM and Mercedes, coming into the picture, Tesla faces increasing competition. A major source of income, meanwhile, has dried up for the company as Stellantis announced that it would no longer buy EV credits from Tesla.
