Tesla reportedly considering building a US battery plant with CATL's technology

Peng Chen, DIGITIMES Asia, Taipei 0

Credit: AFP

Tesla is pursuing a battery project on its home turf that may involve China-based battery giant CATL, according to Bloomberg. The news came on the eve of the US Treasury Department announcing guidance for battery sourcing requirements and is expected to receive some political pushback.

Bloomberg reported that Tesla has been in talks centering its US battery plant with the White House for a few months. With Treasury's upcoming guidance, the EV maker wanted to seek clarity on the rules.

While the plan is still in the early stages, Tesla is reportedly pursuing a project with CATL mirroring the one the latter announced with Ford in February. Ford said it will build an LFP battery plant in Michigan with technologies licensed from CATL.

Tesla is considering setting up a battery plant in Texas to support its gigafactory in the same state, according to Bloomberg. It will likely take a similar approach to that which Ford has taken - wholly owning and operating the facility with the technologies CATL licensed to it.

Representatives of the White House, Tesla, and CATL have not publicly responded to the reported project.

If the plan keeps maturing, it will likely face objections from some US lawmakers. Democratic Senator Joe Manchin and Republican Senator Marco Rubio have strongly opposed Ford's collaboration with a China-based battery company, saying CATL will receive benefits that are supposed to support domestic businesses through this kind of project. Ford has said CATL will not gain any US tax dollars from the deal.

The Treasury will soon release guidance on the battery sourcing requirements that will decide an EV's eligibility for the tax credits. Current rules state critical minerals used in the batteries have to be processed in the US or the country's free-trade partner by 40% before the start of 2024. In addition, at least 50% of battery components must be manufactured or assembled in North America before next year.

Earlier this week, the US signed an agreement with Japan on critical mineral supplies. The deal will allow materials collected or processed in Japan to qualify for the EV credits. The US is negotiating a similar agreement with the European Union.

Manchin continues to take a firm position on the battery sourcing guidance. Reuters reported that Manchin, who chairs the Senate Energy Committee, said he is concerned the most about the Treasury's classification of processing and manufacturing.

On March 29, Manchin said he may go to court if the guidance "goes off the rails."