Tesla Will Use LiFePO4 Batteries For the standard range vehicles

On Wednesday, Tesla released its latest quarterly financial results and announced that it would convert the power battery to a new one using lithium iron phosphate electrodes in the standard battery version of its electric cars. The change is reportedly limited to standard range versions of Tesla's electric vehicles. Tesla will continue to use nickel-cobalt-aluminum NCA lithium batteries for the long-range version. Foreign media analysis pointed out that through this move, Tesla can improve the profit margin of the full range of pure electric vehicles, but will not lead to a rise in sales prices. Previously, Tesla has been criticized by outsiders because of too frequent product price adjustments. Currently, Tesla uses lithium iron phosphate batteries at its electric vehicle factory in Shanghai, China. Such electric vehicles are sold in China, the Asia-Pacific market, and Europe. According to reports, the Chinese market has already promoted the use of lithium iron phosphate batteries. According to industry research institutions, 95% of the world's lithium iron phosphate batteries are produced in China.

In September, Tesla asked U.S. customers who had ordered a Model 3 electric car whether they would be comfortable with a Model 3 powered by a lithium iron phosphate battery. As a comparison, tesla's Model 3 electric vehicles sold in North America in the past have primarily used conventional nickel-cobalt-aluminum (electrode) lithium batteries.

Sam Abuelsamid, the principal analyst at market research firm Guidehouse Insights, told The media there are pros and cons to using lithium iron phosphate batteries. The batteries are cheaper, do not use nickel or cobalt, and lithium iron phosphate batteries are more stable and naturally safer.

However, the worst thing about lithium iron phosphate batteries is their low density of stored energy, which means they can produce less power for the same weight, and their performance is more vulnerable to cold weather, Says Abousamid.

Abussamid said Tesla's switch to lithium iron phosphate batteries was an intelligent move, as they won't be lowering the price of the new version of the car, so margins will naturally increase.

Taylor Ogan, chief executive of Snow Bull Capital, a U.S. investment firm, has been bullish on Tesla and its stock. Lithium iron phosphate batteries are cheaper, safer, and chemically capable of being 100 percent recharged for longer battery life, and electric car owners don't have to worry too much about performance degradation, Ogan commented.

Ogan adds that lithium iron phosphate batteries have the added benefit of better recycling of waste. There are no ethical issues with finding the raw material for lithium iron phosphate (mining other lithium battery electrode minerals has been controversial in the past).

Some electric car makers have used lithium-iron-phosphate batteries made by Chinese companies in the past. They are now fully capable of being used in mainstream electric vehicles, Mr. Ogan said.

Tesla and CATL, a leading Chinese LiFePO4 Battery manufacture, have reportedly signed an agreement to purchase lithium batteries.

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