Tesla's Batteries To Be "Made in the U.S.A."

teslaimage2.jpgWith battery technology the biggest barrier to the proliferation of electric vehicles, companies like electric sports car maker Tesla are constantly surveying their battery options. At the Clean Tech Investor Summit in Palm Springs, Tesla Chairman Elon Musk said the company is moving its battery pack production from Thailand to California, and wants to one day buy battery cells produced domestically as well — potentially even getting into the battery cell business themselves.

Musk said that in order to bring down costs and simplify logistics, the company will start assembling its battery packs — which are made of thousands of battery cells currently bought from Japan — in California (they were formerly assembled in a facility in Thailand). Musk called the homegrown solution “better than shipping battery packs all over the world.”

The fact that the U.S. has little battery cell production is a major hurdle for domestic electric vehicle makers, he noted, as it makes purchasing cells costly, and limits the diversity of the supply.

Tesla’s battery packs are filled with lithium-ion cells, which are basically units of chemicals, that provide the power. The Tesla Roadster currently uses 6,831 cells, and the company currently buys its cells from “Japanese manufacturers,” likely Sony and Sanyo, though it won’t go into specifics. With the company just starting to produce thousands of high-end Roadsters, the expense of the cells hasn’t yet been a major issue.

But as Tesla starts producing tens of thousands of its lower-priced sedan electric vehicle, code-named WhiteStar, and then potentially hundreds of thousands of its third-generation vehicle, the cost of the cells gets much more important, or “fundamental to long-term electric vehicle production,” as Musk put it.

The question is, who will do it? Potentially Tesla? “If we have to enter the cell business then we have to enter the cell business,” he said simply. He followed that by telling the audience that if anyone in the room had a domestic solution, “We’d love to buy” it.

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