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Tesla Inc (NASDAQ: TSLA) has probed in the past its intention to move away from nickel cathode batteries, given supply constraints, and CEO Elon Musk reiterated this in a tweet Thursday night.
What happened: Nickel supply constraints are Tesla’s main concern in scaling up lithium-ion cell production, Musk said in the tweet.
Tesla CEO also added that this is the reason the company is shifting its standard range EV models to the iron cathode.
Nickel is our primary concern for scaling up lithium-ion cell production. This is why we are switching from standard range cars to an iron cathode. Lots of iron (and lithium)!
– Elon Musk (@elonmusk) 25 February 2021
Musk also suggested that using lithium iron phosphate, or LFP, batteries would free up more lithium-ion chemistry cell batteries using nickel cathodes for the company’s other vehicle programs.
Previously, Musk said that the energy density of LFP batteries has improved enough to warrant the use of these cells in low-end vehicles.
Related link: Tesla gets high street, price target of 200: ‘The fireworks are not over yet’
Why this is important: Tesla uses LFP batteries in its standard Model 3 lineup as well as vehicles made in China.
Thursday’s tweet indicates that the electric vehicle giant may switch to LFP batteries in base vehicle models released in Europe and other regions.
Nickel is the preferred option for EV batteries due to its higher energy density and greater storage capacity.
Yet compared to iron, nickel is expensive, with prices skyrocketing lately as the burgeoning EV market continues to rely heavily on the metal.
Nickel mining also involves many environmental risks. Fitch said in a recent report that he expects the increased use of nickel in batteries to lead to a market deficit from 2025.
Related Link: How Bitcoin and Demand Are Driving Tesla Stocks Down
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