and the Chinese battery manufacturer CATL are considering building an battery plant in the . According to media reports, the US carmaker discussed the matter with US politicians to see how the US Inflation Reduction Act would apply.
Bloomberg first reported the story, citing people familiar with the talks. A potential location for the factory has yet to be finalised, along with the ongoing negotiation.
Tesla representatives met with the White House to know how and if the factory would be eligible for subsidies under the Inflation Reduction Act (IRA). And if its EVs would be if they were fitted with CATL technology. Because under the law, EVs made with a certain amount of China-linked materials in their batteries do not qualify for tax credits.
The US Inflation Reduction Act also says that for electric vehicles to be eligible for tax credits in the USA from 2027, 80 per cent of the market value of critical minerals used in the battery must come from the US or a country with whom a free-trade agreement has been signed. So far, these agreements have been signed with Canada, Mexico and, most recently, Japan. The US government is also currently negotiating a similar deal with the EU.
Back to the potential battery plant: Ford had recently announced a similar deal with CATL. The carmaker is also setting up another LFP battery plant in the US state of Michigan. CATL will licence the technology to Ford and provide technical assistance. Ford reportedly said that CATL wouldn’t receive any US tax dollars from the deal, but it still sparked controversy on Capitol Hill.
The agreement between Tesla and CATL could look similar, with Tesla owning the plant and licensing the technology from China. However, it remains unclear if and when the deal will go through at all.