Tesla to expand US facility in effort to onshore battery supply chain

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Electric car manufacturer Tesla is planning to expand its gigafactory in Sparks, Nevada with the opening of a new facility dedicated to battery production, according to reports from Bloomberg News.

It is reported that Tesla plans to buy idle equipment necessary for the manufacturing of lithium iron phosphate (LFP) cells from Chinese battery manufacturer Contemporary Amperex Technology (CATL).

These cells will be reportedly be used in the development of Tesla Megapack batteries. This product, Tesla says, ‘stores energy for the grid reliably and safely, eliminating the need for gas peaker plants and helping to avoid outages’.

Tesla is also expected to double the capacity of its megafactory in Lathrop, California, which is currently ‘capable of producing 10,000 Megapack units every year, equal to 40GWh of clean energy storage’.

In his opening remarks on a Tesla webcast announcing the company’s financial results for Q4 2023, Tesla CEO Elon Musk said: “The energy storage business delivered nearly 15GWh of batteries in 2023, compared to 6.5GWh the year before so [that’s] tremendous year-over-year growth – triple digits.

“I think we’ll continue to see very strong growth in storage, as predicted. I said for many years that the storage business would grow much faster than the car business and it is doing that.”

An unnamed source ‘familiar with the matter’ told Bloomberg News that the decision to expand battery production in Sparks is part of a broader effort to onshore the supply chain for LFP cells in the US.

The US government has been vocal in recent years about the importance of onshoring certain supply chains, encouraging a ‘made in America supply chain for critical materials’. In June 2021, the Biden-Harris Administration published the findings from its supply chain assessment which claimed that ‘over-reliance on foreign sources and adversarial nations for critical minerals and materials posed national and economic security threats’.

The White House has described supply chain resilience as ‘a priority from Day One of [Biden’s] Administration’. During his time as president, Biden has proposed legislation to reduce carbon emissions in US government supply chains and unveiled 30 new actions to fortify US supply chains.

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