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Tesla’s Dual Battery Strategy for Model 3 and Model Y: Balancing Tax Credits and Production

Tesla's Dual Battery Strategy for Model 3 and Model Y
Tesla's Dual Battery Strategy for Model 3 and Model Y

To balance customer tax breaks and production efficiency, Tesla is introducing a new wrinkle in their battery strategy for the US Long Range Model 3 and Model Y. Two battery options will be available.

Those eligible for federal tax credits will receive vehicles equipped with Panasonic batteries, which qualify for the incentive. For others, Tesla will utilize LG batteries.

This approach prioritizes Panasonic cells to maximize the credit benefit for qualifying customers, while potentially reducing production costs through the use of LG batteries.

Tesla's Dual Battery Strategy for Model 3 and Model Y

Tesla’s Dual Battery Strategy for Model 3 and Model Y (Tesla)

However, some question whether LG batteries will deliver equivalent performance, particularly in charging speed. As Tesla revs up production of vehicles like the tax credit-eligible Model 3 LR, concerns are rising about a potential battery bottleneck.

This could stem from either a temporary dip in US output of Panasonic’s key 2170 battery cells or a surge in Tesla’s electric vehicle deliveries.

To counter this looming shortage, Tesla is broadening its battery supplier base, bringing LG on board to supplement Panasonic’s existing supply.

However, with both companies’ new US battery factories slated to reach full capacity only around 2027, Tesla faces limited options in the near term.

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