NMC, LiFePO, and $3,750 subsidy

[bwilson4web]

The IRA subsidy is reduced on the imported, LiFePO battery, Model 3 Standard Range, by $3,750. Meanwhile, Tesla reports the NMC, 4680 cells are going into the next and higher end Teslas. So this begs the question of would it be cheaper to put NMC, USA cells back in the Model 3?

Assuming the earlier 55 kWh pack and no adjustment for the weight difference:

• $3,750 ~= 55 kWh (NMC) - 55 kWh (LiFePO) :: the price difference of Federal subsidy
• 55 kWh (LiFePO) + $3,750 = 55 kWh (NMC) :: achieving price parity
• (55 kWh (LiFePO) + $3,750 = 55 kWh (NMC)) / 55 kWh :: relative costs per kWh
• (LiFePO) + $68.18 = (NMC) :: cost difference per kWh of LiFePO and NMC
• $68.18 = (NMC) - (LiFePO) :: another way to show price difference

This suggests if the price per kWh is $68.18 or greater for imported LiFePO, then that is the lowest cost to the buyer given based on current IRA subsidy. But if the cost difference is less than $68.18, converting the Model 3 Standard Range to NMC is the lower cost option.

I have not tried to model the relative weight of LiFePO versus NMC cells which should be a factor. The heavier weight of LiFePO would require more cells to match the performance of the lighter weight NMC cells. For now, I leave that as an academic exercise.

I may pose that as a retail investor question for the next quarterly review:

• What would be the price difference of a NMC pack Model 3 with $3,750 subsidy savings be compared to the existing, imported LiFePO pack without the subsidy?

Bob Wilson

 

[marshall]

At the end of this year, the Chinese battery doesn't qualify for any tax credit. So maybe it's more of a supply issue, until the 4680 battery ramps up more.

‘‘(7) EXCLUDED ENTITIES.—For purposes of this section, the term ‘new clean vehicle’ shall not include— ‘‘(A) any vehicle placed in service after December 31, 2024, with respect to which any of the applicable critical minerals contained in the battery of such vehicle (as described in subsection (e)(1)(A)) were extracted, processed, or recycled by a foreign entity of concern (as defined in section 40207(a)(5) of the Infrastructure Investment and Jobs Act (42 U.S.C. 18741(a)(5))), or ‘‘(B) any vehicle placed in service after December 31, 2023, with respect to which any of the components contained in the battery of such vehicle (as described in subsection (e)(2)(A)) were manufactured or assembled by a foreign entity of concern (as so defined).’’. (f) SPECIAL RULES.—Section 30D(f) is amended