Photo: Tesla
Tesla diversified its US battery suppliers and is offering the Long Range Model 3 and Model Y with two different battery packs. Customers who qualify for the federal tax credit will get Panasonic batteries, while those who don't will get LG batteries. This saves money and allows the company to keep the qualifying battery packs for people who can access the tax credit.
Tesla's supply chain and configuration choices are sometimes confusing for regular customers. The best example is the Model Y, which is produced in four gigafactories around the world. The Fremont factory and Giga Texas supply the US market, while the vehicles sold in Europe are produced at Giga Berlin and Giga Shanghai.
This has sometimes led to people getting different configurations for the same vehicle. For instance, the Model Y produced at Giga Texas in 2023 with a structural battery pack and 4680 cells was very different from what rolled off the production line in Fremont. Tesla later phased out the 4680 Model Y, but this doesn't mean that cars produced in different factories are equal. Tesla recently split its battery cell supply between Panasonic and LG, using both battery types in similar Model 3 and Model Y configurations.
The reason for this choice is to save US-made battery cells for people who qualify for the federal tax credit. Specifically, people who claim eligibility for the credit will be matched to a car that qualifies, whereas those who are not eligible will get a non-qualifying VIN. The former group will receive a vehicle made with Panasonic cells, but the latter will have to contend with an LG battery, which many think is inferior. This is especially true for its charging performance.
The move might help Tesla save some money, considering that LG batteries are cheaper, being made with components imported from China. Based on this, I expect all people who lease their Tesla to get an LG battery since rules of origin don't matter for leases. Tesla will save not only money but also the precious US-made cells, which will be offered only to those who need them to benefit from the federal tax credit.
This move might indicate that the production of 2170 cells in the US might be temporarily affected or that Tesla EV production is suddenly off the charts (or a new model ramps up). Considering that the refreshed Model 3 is ramping up production and the LR variant now qualifies for the tax credit, Tesla could indeed face a Panasonic cell shortage. The Model Y RWD is also made with NMC cells instead of LFP, so adding LG cells to the mix will offer Tesla more breathing room.
Both Panasonic and LG plan to open new battery production facilities in the US, although they will not reach a meaningful production capacity in 2024. Panasonic is building its second factory in Kansas, with plans to start trial production by the end of the year. LG Energy Solution also plans a new battery factory in Arizona, which will come online in 2026. In both cases, ramping up production to maximum capacity would take about a year.
This has sometimes led to people getting different configurations for the same vehicle. For instance, the Model Y produced at Giga Texas in 2023 with a structural battery pack and 4680 cells was very different from what rolled off the production line in Fremont. Tesla later phased out the 4680 Model Y, but this doesn't mean that cars produced in different factories are equal. Tesla recently split its battery cell supply between Panasonic and LG, using both battery types in similar Model 3 and Model Y configurations.
The reason for this choice is to save US-made battery cells for people who qualify for the federal tax credit. Specifically, people who claim eligibility for the credit will be matched to a car that qualifies, whereas those who are not eligible will get a non-qualifying VIN. The former group will receive a vehicle made with Panasonic cells, but the latter will have to contend with an LG battery, which many think is inferior. This is especially true for its charging performance.
The move might help Tesla save some money, considering that LG batteries are cheaper, being made with components imported from China. Based on this, I expect all people who lease their Tesla to get an LG battery since rules of origin don't matter for leases. Tesla will save not only money but also the precious US-made cells, which will be offered only to those who need them to benefit from the federal tax credit.
This move might indicate that the production of 2170 cells in the US might be temporarily affected or that Tesla EV production is suddenly off the charts (or a new model ramps up). Considering that the refreshed Model 3 is ramping up production and the LR variant now qualifies for the tax credit, Tesla could indeed face a Panasonic cell shortage. The Model Y RWD is also made with NMC cells instead of LFP, so adding LG cells to the mix will offer Tesla more breathing room.
Both Panasonic and LG plan to open new battery production facilities in the US, although they will not reach a meaningful production capacity in 2024. Panasonic is building its second factory in Kansas, with plans to start trial production by the end of the year. LG Energy Solution also plans a new battery factory in Arizona, which will come online in 2026. In both cases, ramping up production to maximum capacity would take about a year.
NEWS: Tesla is now manufacturing variants of the Model Y and Model 3 in the U.S. that DO and DON'T qualify for the $7,500 Federal EV credit.
— Sawyer Merritt (@SawyerMerritt) June 24, 2024
Customers who claim eligibility for the credit will be matched to a VIN of a car that qualifies for the EV credit. Those who are not… pic.twitter.com/GnU2gQts1e
Google News