Piper Sandler: Is Tesla the only U.S. automaker with a plan to bypass China?

Investing.com -- Tesla appears to be the only U.S. automaker seriously pursuing battery independence from China, according to Piper Sandler. 

“Thanks to vertical integration, Tesla (NASDAQ:TSLA) is the only car company that is trying to source batteries, at scale, without relying on China,” the firm said in a note following a call with battery expert Jordan Giesige. 

For its in-house 4680 batteries, “China reliance is already approaching 0%,” Piper Sandler noted.

While full independence remains years away, the firm emphasized that “at least Tesla has a plan.” 

The company is reportedly working to refine its own lithium, produce cathode active materials (CAM), coat its own electrodes, and assemble batteries entirely in-house. 

“No other U.S. entity can make similar claims,” argues Piper Sandler.

One major focus is Tesla’s dry battery electrode (DBE) process, which Piper Sandler said “is 5x–6x faster than coating anodes or cathodes with a wet process.” 

If scalable, they believe it could deliver “material” capital and operating cost savings. The process may start scaling by year-end, though Piper said Giesige highlighted that this remains uncertain.

Tesla is also making progress on domestic iron-based (LFP) battery production. Piper Sandler said Giesige pointed out that the company is likely trying to commission “~10GWh of domestic LFP capacity,” which could eventually cover 25% of the 40GWh required for Megapack production in the U.S.

Ultimately, even if Tesla’s novel refining methods fail, the firm argues that the company wouldn’t be disadvantaged relative to competitors, because no one else is trying. 

“Success isn’t assured, and in the next 2+ years, there’s no way to insulate the U.S. supply chain from China... but at least Tesla has a plan,” concluded Piper Sandler.