Tesla opts for LFP over NCA in the Chinese market

It is highly unlikely that this choice was influenced by cobalt costs, as Tesla's NCA cathodes use a relatively small amount of cobalt compared to most NMC formulations. Instead, there are several other factors likely driving Tesla's LFP decision. First, doing so will help insulate Tesla against a nickel feedstock shortage, which is an increasingly concerning scenario given rapidly increasing demand. Second, the Chinese BEV market is the largest and most competitive in the world, with dozens of automakers (including a staggering number of Tesla copycats) competing with a diverse array of solutions. Lastly, even with reduced energy density, Tesla expects that its drivetrain efficiency will still allow it to qualify for range subsidies.

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