Tesla in talks to build US battery plant with Chinese partner CATL
Tesla Inc. is looking to build a battery plant in the United States, according to people familiar with the matter, in what would likely be a controversial arrangement with China's dominant electric-vehicle battery manufacturer.
The EV maker discussed plans involving Contemporary Amperex Technology Ltd. with the White House in recent days, said the people, who asked not to be identified revealing private conversations. Tesla representatives sought clarity on the Inflation Reduction Act rules that the Biden administration is finalizing this week, according to some of the people. Rohan Patel, the company's senior global director of public policy, was among those involved with the discussions, one of the people said.
Tesla wants to pursue a deal similar to one that Ford Motor Co. announced last month in Michigan with the battery maker, known as CATL, to construct a plant wholly owned by the U.S. automaker, according to the people. Ford is licensing CATL technology to build lithium iron phosphate batteries in a plant to be built in Marshall, roughly 100 miles west of Detroit.
Representatives of Tesla, CATL and the White House didn't immediately respond to requests for comment. Patel also didn't respond.
Tesla is in expansion mode, deploying its —$22 billion in cash to crank up production volumes and lower costs as it faces increased competition. CATL is key to that plan: it is considered the world leader in lithium iron phosphate batteries, a chemistry that is cheaper than the nickel-based batteries used in the West.
The automaker is considering building the battery plant in Texas to supply its EV assembly plant there, though a location hasn't been finalized, some of the people said. Like the Ford deal structure, Tesla would own and operate the factory while licensing the technology from CATL.
The auto industry has been lobbying to influence how the U.S. Treasury Department will interpret requirements in President Joe Biden's signature climate package. The law is intended to wean the U.S. off its dependence on China for battery materials by incentivizing a U.S.-based supply chain for EVs. One specific clause that has been the object of intense lobbying is 30D, which is designed to withhold consumer tax credits for EVs made with a certain amount of China-linked materials in their batteries.
Ford's deal has provoked ire from lawmakers including Democratic Senator Joe Manchin of West Virginia and Republican Senator Marco Rubio of Florida, who argue that it allows the Chinese company to benefit from U.S. subsidies.
It also has engendered resistance from locals in the Marshall area — partly for the deal's ties to a Chinese company and partly because the proposed development risks altering the character of the bucolic town and surrounding county in mid-Michigan.
Bloomberg's Dana Hull contributed to this report.