Longer Range for the Same Price. Will Tesla’s LFP M3 Deal Another Blow?
Author: CBEA
Ever since Reuters revealed in February that Tesla and CATL are talking about using cobalt-free batteries in electric vehicles coming out of Shanghai Giga Factory, the industry speculated that the so called cobalt-free battery is actually an LFP battery.
On many occasions, CATL and Tesla neither denied nor confirmed this speculation. However, as time passed by and cooperation between the two became more apparent, the news that Tesla Model 3 Standard Range will be using CATL’s LFP battery gradually got confirmed. On May 15th, media found that MIIT’s 333rd catalog of new car applications contained Tesla (Shanghai) Model 3 that uses LFP battery.
So, does this mean speculations have finally proven to be correct? Well, not quite. When we wanted to check the catalog again, we have realized that MIIT deleted it, so we are not able to confirm if there were any changes to the catalog. MIIT’s move still leaves some room for speculation.
Of course, MIIT deleting this catalog might not have to do with Tesla Model 3. There might be other reasons too, so let’s take a sneak peak to this Tesla Model 3 LFP version.
Its range is longer
On the photo in the MIIT declaration we can see that LFP version of Tesla (Shanghai) Model 3 has a curb weight at 1,745 kg, and Model 3 Standard Range (base version) that carries LG Chem’s cylindrical NMC811 has curb weight at 1,614 kg. The curb weight probably increased due to the battery. That is, LFP version’s curb weight increased 131 kg. The weight probably increased for two reasons.
One, LFP battery’s energy density is lower compared to NMC one, so more batteries are needed as to keep the capacity. The second reason was probably to increase capacity of the whole car as to make its range longer.
Worth noticing is that the curb weight of Model 3’s LFP version is the same with Model 3 Long Range version made in Shanghai. Some analysts believe that the new version of Model 3 used original 75 kWh pack from Long Range version and simply replaced NMC batteries with LFP ones.
If this is true, then we can approximately define capacity of Model 3 LFP version. Currently, energy density of LFP pack is around 140 Wh/kg, and energy density of NMC pack installed in Model 3 Long Range is 161 Wh/kg. Therefore, 75 kWh pack in Long Range, means capacity of LFP version is a bit lower, somewhere between 66–68 kWh.
Based on the weight of Model 3 LFP version, some media speculates its capacity is 68 kWh and range is over 510 km. Also, some other media sources said that Tesla (Shanghai) Model 3 SR will use CATL CTP solution on LFP battery, so the range of Model 3 LFP version is longer than the Model 3 SR+ with NMC811 from LG Chem.
Actually, judging on many models that have been released this year, over 500 km range is essentially a standard feature among most popular models. Consumers are already hard to please with 445 km range offered by base version of Model 3. If Tesla wants to reach bigger market in China, it is only natural that it increases the range of its base version model to over 500 km.
It must be noted that once base version of Model 3 with over 500 km range enters the market, it will present a new huge blow to the Chinese OEMs.
The new subsidy scheme is already out and passenger EVs with price over RMB 300K are not eligible for the subsidies. In order to get the subsidies, Tesla reduced the price of the base version to RMB 271,550. One of the main considerations that Tesla had in launching LFP version of Model 3 was cutting costs, so once Model 3 LFP version is out in the market, the price will most likely be equal to the current price of base version, i.e. around RMB 270 K.
Longer range for the same price will not only present a blow for NIO, XPeng, BYD and many other Chinese brands, but will also present a challenge to BMW, Audi, Mercedes, VW, Toyota and other international brands. This challenge will not only be present in the NEV market, but will also occur among internal combustion vehicles in this price range. LFP might become a force that will shake up the pillars of the ICEV market.
The cost of the new car might be even lower
The reason why Tesla wants to install LFP battery on Model 3 is because its cost is really tempting compared to NMC batteries. Earlier analysis showed that the current Tesla LFP pack cost per kWh is RMB 650, while cylindrical NMC pack is RMB 800 per kWh. The difference is RMB 150, so when you take 52 kWh base version, Tesla could save up to RMB 7,800 on costs.
If LFP was used to keep the capacity at 52 kWh, these cost savings would not mean much to Tesla as they would not be that significant. So, Tesla made a smarter choice — without increasing costs too much, it increased the range by 100 km and is thus able to attract more potential customers.
Hence, based on the above described Model 3 LFP version, with increased capacity, range increased to over 510 km from 445 km making it more appealing for the customers, while the total cost increased around RMB 1,300 compared to NMC battery. You might say Tesla played this hand quite well.
We need to add that since Tesla LFP version uses CATL’s CTP LFP solution, its cost might be even lower than we have estimated. CATL’s CTP does not use battery module and needs 40% less battery components, while it increases production efficiency by 50%. Its effect on cost is also very clear.
Recently, Reuters cited an insider saying that CATL’s LFP battery cost has already dropped to USD 80 per kW, while cell cost dropped to USD 60 per kW. It might be that thanks to the cost advantage of LFP, the cost of this version of Tesla Model 3 might be even lower than our estimate.
Naturally, looking at the materials, LFP batteries are much safer than NMC ones. Switching to LFP will reduce the risk of Tesla Model 3 catching fire.
In the end, let us digress a bit. Based on speculations, Tesla Model 3 LFP version will use CATL’s prismatic batteries. We estimate that as this model enters market, LG Chem will stop producing its NMC811 cylindrical batteries and mainly continue to produce for Model 3 LR and Model Y. We think that as Tesla starts using LFP on its models that it will start considering to use other battery shapes beside cylindrical one.
Original source: http://www.cbea.com/djgc/202005/253665.html
Translation/edit: MoneyballR
