Tesla has unveiled its lithium-iron-phosphate (LFP) battery cell factory in Nevada and claims that it is nearly ready to start production.

Like several other automakers using LFP cells, Tesla relies heavily on Chinese manufacturers for its battery cell supply.

Tesla’s cheapest electric vehicles all utilize LFP cells, and its entire range of energy storage products, Megapacks and Powerwalls, also employ the more affordable LFP cell chemistry from Chinese manufacturers.

This reliance on Chinese manufacturers is less than ideal and particularly complicated for US automakers and battery pack manufacturers like Tesla, amid an ongoing trade war between the US and virtually the entire world, including China.

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As of last year, a 25% tariff already applied to battery cells from China, but this increased to more than 80% under Trump before he paused some tariffs on China. It remains unclear where they will end up by the time negotiations are complete and the trade war is resolved, but many expect it to be higher.

Prior to Trump taking power, Tesla had already planned to build a small LFP battery factory in the US to avoid the 25% tariffs.

The automaker had secured older manufacturing equipment from one of its battery cell suppliers, CATL, and planned to deploy it in the US for small-scale production.

Tesla has now released new images of the factory in Nevada and claimed that it is “nearing completion”:

Here are a few images from inside the factory (via Tesla):

Previous reporting stated that Tesla aims to produce about 10 GWh of LFP battery cells per year at the new factory.

The cells are expected to be used in Tesla’s Megapack, produced in the US. Tesla currently has a capacity to produce 40 GWh of Megapacks annually at its factory in California. The company is also working on a new Megapack factory in Texas.

Ford is also developing its own LFP battery cell factory in Michigan, but this facility is significantly larger, with a planned production capacity of 35 GWh.

Electrek’s Take

It’s nice to see this in the US. LFP was a US/Canada invention, with Arumugam Manthiram and John B. Goodenough doing much of the early work, and researchers in Quebec making several contributions to help with commercialization.

But China saw the potential early and invested heavily in volume manufacturing of LFP cells and it now dominates the market.

Tesla is now producing most of its vehicles with LFP cells and all its stationary energy storage products.

It makes sense to invest in your own production. However, Tesla is unlikely to catch up to BYD and CATL, which dominate LFP cell production.

The move will help Tesla avoid tariffs on a small percentage of its Megapacks produced in the US. Ford’s effort is more ambitious.

It’s worth noting that both Ford’s and Tesla’s LFP plants were planned before Trump’s tariffs, which have had limited success in bringing manufacturing back to the US.

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Senate republicans passed their version of the republican tax bill previously passed by the House. The bill retains most of the bad parts of the House bill, and still kills a slew of tax credits to help working families become more energy efficient, improve US air quality, and boost US manufacturing – instead channeling that money to wealthy elites, increasing the deficit by trillions of dollars along the way.

The Senate bill retains much of the language killing off energy efficiency credits and credits responsible for green manufacturing growth in the US.

The credits were largely established under President Biden as part of the Inflation Reduction Act, which raised hundreds of billions of dollars through tax enforcement on wealthy individuals and corporations and channeled that into energy efficiency credits for American families.

We’ve covered how families could save thousands of dollars on upgrades to lower their energy costs through these credits.

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But these credits aren’t just money-saving for Americans, they also work to boost American manufacturing, due to various provisions in the bill, particularly around the $7,500 EV tax credit which was limited to cars that undergo final assembly in North America.

While loopholes exist, nevertheless the IRA resulted in a massive expansion of American manufacturing, driving hundreds of billions of dollars of investment and creating hundreds of thousands of jobs.

So of course, republicans want to repeal this good thing. The republican tax plan currently working through Congress repeals most of the credits established in the IRA which were responsible for this boom in investment.

Republicans in the House narrowly passed their version of the bill in May, which then went to the Senate and was modified. The Senate mostly kept the job-killing language of the House bill, eliminating consumer and business tax credits that helped to spur investment in US manufacturing – specifically the 30D and 25E credits for new & used clean vehicles, the commercial clean vehicle credit, the EV charger credit, and funding to reduce pollution from heavy duty vehicles. Many of these credits have domestic sourcing provisions which encouraged companies to establish US manufacturing facilities.

It’s estimated that the elimination of these credits will kill 2 million jobs by nipping a nascent US EV manufacturing boom in the bud before it really gets started. Many of those jobs will be lost in states whose Senators voted for the bill, like Tennessee and South Carolina which will lose 140k and 135k jobs respectively. All four Senators from those states – Marsha Blackburn, Bill Hagerty, Lindsey Graham, and Tim Scott – voted to put their constituents out on the street.

All told, every Democrat voted against the job-killing, deficit-increasing measure, and three republicans had even a small amount of good sense and joined to oppose the bill – Susan Collins of Maine, Rand Paul of Kentucky, and Thom Tillis of North Carolina. But it managed to pass with a 50-50 vote with tiebreaker from J.D. Vance, the runningmate of the convicted felon currently squatting in the White House (despite being Constitutionally barred from holding office in the US).

Originally, there were additional measures in the bill that seemed to have been included just out of spite. For example, republicans wanted to sell off USPS’ awesome new EVs for scrap, losing billions of dollars in the process and killing the American jobs building them. And republicans wanted to add a punitive tax on EVs while subsidizing gas vehicles even more, increasing the budget shortfall for highways.

Thankfully, neither the USPS or registration tax measures seem to have made it into the final Senate bill, but the main measures killing American jobs have remained.

The Senate bill is, in some ways, worse than the House bill. For example, it eliminates the consumer EV credit 3 months earlier, thus increasing inflation faster for one of the most costly items that a consumer owns – their car. And that won’t just affect EVs – by making EVs $7,500 more expensive, competing gas vehicles will feel less downward pressure on price from the competition of cleaner, cheaper-to-own EVs, and manufacturers could well increase prices.

All of this occurs in the context of a global automotive industry which is rapidly shifting to electrification, currently led by China. China is the number one EV maker in the world, and is rapidly transforming its manufacturing industry to meet the needs of the future.

Domestic EV sales in China have ballooned in recent years. China got a slower start than some countries, having low EV penetration until around 2020, but has gone exponential in recent years. In 2023, ICE car values began to plummet and these cars became unsellable in China, acting as a canary in the coal mine for what will happen to the global auto industry if other automaking countries don’t take EVs seriously.

It’s estimated that this year, China will sell more EVs than the US sells cars overall.

But China is not just the number one EV maker, it’s also the number one car maker. As of last year, China is the top auto exporter in the world, eclipsing Japan which had been the primary holder of that title for decades.

Japan came to international prominence in automotive manufacturing in the 1970s, led primarily by the adoption of technologies that better confronted the environmental challenges of the day, while Western automakers continued to try to sell unpopular, inefficient gas guzzlers. Western governments failed to recognize the threat of growing overseas competition, and responded fecklessly with tariffs that didn’t work. Sound familiar?

And so, the Senate bill, which would strangle the attempt to catch US EV manufacturing up to China’s long-planned dominance of the field, will only serve to reduce potential international competition to the rise of China. China is taking EVs seriously, and the US could have, if it weren’t for the spiteful actions of the republicans.

They’re trying to kill off these manufacturing investments likely to snub one of President Biden’s biggest wins, and as a giveaway to the fossil fuel industry that bribes them disproportionately. But all this will do is harm US manufacturing and make Americans sicker and poorer – and help the US’ geopolitical rivals step into the vacuum left by America’s abdication of the auto industry.

The bill now moves back to the House, where that body will have its chance to vote on the changes made in the Senate bill. The last vote passed by the narrowest possible majority, so it’s possible that the changes will kill the bill in the House, but given the recent history of republicans as wanting to make literally everything worse out of spite, it might take a miracle.

If you happen to want good things to happen to America, instead of bad things, you could perhaps call your Congressperson and ask them to vote against this job-killing, deficit-increasing, inflation-causing bill.

Another thing republicans want to kill is the rooftop solar credit. That means you could have only until the end of this year to install rooftop solar on your home, before republicans raise the cost of doing so by an average of ~$10,000. So if you want to go solar, get started now, because these things take time and the system needs to be active before you file for the credit.

To make sure you find a trusted, reliable solar installer near you that offers competitive pricing, check out EnergySage, a free service that makes it easy for you to go solar. It has hundreds of pre-vetted solar installers competing for your business, ensuring you get high-quality solutions and save 20-30% compared to going it alone. Plus, it’s free to use, and you won’t get sales calls until you select an installer and share your phone number with them.