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Tesla reportedly in discussions to use cobalt-free batteries in Chinese vehicles

By Lawrence Gash

Surging car brand seeks alternative from expensive metal

According to Reuters, electric vehicle brand Tesla is currently in advanced and ongoing discussions with the Chinese battery firm CATL. These talks are allegedly focussing on exploring alternatives to the current cobalt-dependent batteries in Tesla vehicles.

Instead of relying on one of the most expensive metals in the world, the American automotive upstart would use CATL’s lithium iron phosphate (LFP) batteries in the vehicles it produces for the Chinese market.

A source with supposedly close knowledge of the discussions revealed that the alternative LFP batteries would be cheaper than the current batteries by a “double-digit percent.”

While neither party has commented on the report, such a move would be in line with Tesla Chief Executive Elon Musk’s 2018 promise to cut his company’s cobalt use “to almost nothing.”

80 per cent of the world’s cobalt produced in the volatile Democratic Republic of Congo. Some commentators and NGOs have voiced their concerns that in the rush to develop electric vehicles companies and consumers have turned a blind eye to the DRC’s lack of workers’ rights.

Furthermore, with a level of scarcity and at around $33,000.000 per tonne the metal is incredibly expensive to use. With its newly built $2bn (£1.5bn, €1.8bn) giga-factory in Shanghai Tesla has set out to expand its operation in China, a cheaper battery would obviously aid this effort.

However, the company arguably faces an uphill struggle. 2019 proved to be a poor year for sales of new electric vehicles (NEVs) in China, in part thanks to the US-China trade war but also due to the government cutting subsidies to the industry.

With the Covid-19 epidemic killing almost 1,900 Chinese, infecting tens of thousands and bringing China’s economy to a standstill through widespread shutdowns, Tesla’s hopes for 2020 growth in the region could soon be receding.

Luckily for Elon Musk, Tesla’s share price has managed to defy conventional wisdom to more than double since the start of the year. Last week, on the day it announced an SEC probe into its financial arrangements, a recall of 15,000 SUVs in China and a $2.3bn shares sale, the firm’s share price rose by around 4 per cent.

By mid-afternoon trading Tesla’s share price has enjoyed yet another sterling day, gaining 6.77 per cent to stand at $54.15.

FURTHER READING: Tesla short-sellers hit as stocks surge by 20 per cent

FURTHER READING: Chinese auto sector faces February ‘havoc’

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