Tesla to open US battery plant with equipment from China’s CATL

Tesla will expand battery production in Nevada, opening a small facility using idle equipment from China’s Contemporary Amperex Technology, according to people familiar with the matter.

The carmaker plans to buy machinery from CATL, as the battery maker is known, and install it in the city of Sparks, said the people, who asked not to be identified. Tesla will have full control of the facility and cover 100 per cent of the costs, and CATL personnel will be uninvolved other than helping to set up the equipment, they said.

The plant, which will make cells for Tesla’s large-battery Megapack product, is part of a broader effort to onshore the supply chain for lithium-iron-phosphate cells in America, according to one of the people. Tesla also sees the equipment-purchase arrangement as a cost-effective way to set up new facilities, the person said.

The move comes amid heightened scrutiny by US lawmakers and the Biden administration of technology collaboration with China in a number of fields, including production of batteries. Tesla’s purchase may sidestep criticism about US companies’ dependence on Chinese partnerships because of CATL’s minimal involvement.

Tesla did not respond to a request for comment. CATL also did not immediately respond to a request sent outside business hours in China.

Alongside the plans for the new facility, Tesla has said it intends to double capacity this year at an existing battery factory in Lathrop, California. The efforts support Tesla chief executive officer Elon Musk’s assertion during a conference call last week that the company's energy-storage operations would grow faster than its electric car business this year. Megapack is the company’s battery intended for utilities.

CATL, the world’s biggest maker of EV batteries, dominates the market for so-called LFP batteries, which are cheaper and more stable than nickel-based alternatives. China’s electric-car market is projected to slow for a second year in 2024, as the nation’s patchy economic recovery from the pandemic weighs on consumer sentiment.