October 1st, 2020 by Steve Hanley
It seems like just yesterday we wrote about how Model 3 sedans built in Shanghai would begin using LFP batteries on Thursday and speculated how that change might affect the price of the cars. Actually, it was only yesterday. Now today is here and sure enough, according to Reuters, Tesla China has announced an 8% price cut for the Model 3. Effective immediately, the starting price for the Model 3 in China is 249,900 yuan ($36,805). Yesterday the price was 271,550 ($39,900). What a difference a day makes! Both prices are net after all government subsidies are applied. Prices for the long range rear wheel drive Model 3 have also been reduced nearly 10% from 344,055 yuan ($50,668) to 309,900 yuan ($45,639).
LFP (lithium iron phosphate) batteries cost about 10% less than the NMC (nickel manganese cobalt) that have been the mainstay of Model 3 cars to date according to Zeng Yuqun, CEO of CATL, which may or may not be supplying the batteries for the Chinese made Model 3 as of today. (Neither Tesla nor CATL has responded to press inquiries on that subject.) The lower cost is mostly attributable to the use of iron and phosphate, which are plentiful and inexpensive compared to nickel and cobalt. As ElectricGuy commented on our story yesterday, no nickel and no cobalt means no nickel and cobalt mining, a process that has significant environmental and social justice issues associated with it.
LFP batteries have somewhat lower energy densities than NMC batteries, but they are far less prone to thermal runaway events that can result in fires or explosions. That means they need less complex — and costly — cooling systems when installed in cars, another factor that drives down prices. They also are capable of more charging cycles than the NMC batteries, which increases their service life. When Elon Musk and Zeng Yuqun talk about “million mile batteries” today, they are talking about LFP batteries.
Apparently, the switch in battery chemistry has had no negative effect on range, however. According to Tesla, the range is now 468 kilometers, up from the 445 kilometers previously listed. All range numbers for cars sold in China still use the outdated NEDC standard.
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