Tesla LFP cell production stays on track as US cathode push advances

Tesla LFP cell

Tesla LFP cell production remains on schedule as the company advances US lithium refining and cathode output. The plan prioritizes onshore battery materials and the first domestic LFP cells this year. The strategy targets energy storage markets alongside vehicle electrification.

Refining, cathode and storage milestones

Tesla said its LFP cell factory in Sparks, Nevada is nearing completion. The company began operating a lithium hydroxide refinery near Corpus Christi in December 2024. Energy storage deployments rose 2% to 9.6GWh in the recent quarter. Tesla also deployed the first Megapacks from its Shanghai factory. The company said paired solar and Megapack systems are cost-competitive with fossil power.

Demand, profitability and policy headwinds

Quarterly deliveries fell to 384,122 EVs, from 443,956 a year earlier. Second-quarter profit slipped 16% to $1.2bn on lower volumes and pricing. Tesla launched a Robotaxi service in Austin and introduced Model Y in India. The company reported market share declines across the US, Canada, Europe and China. Tesla LFP cell production remains central to its US supply chain plans.

However, tariff and policy shifts are pressuring margins. Tesla estimated about $300mn in added tariff costs this year. Two-thirds affect the automotive segment and the rest the energy business. The company cited challenges from the July 4 tax and energy law and tariffs. The $7,500 US tax credit repeal by quarter-end limited domestic vehicle supply. Management said early credit expirations also weigh on residential storage demand. Tesla LFP cell production is intended to offset import exposure over time.

The Metalnomist Commentary

Tesla’s domestic cathode and LFP build-out lowers geopolitical and tariff risk across its battery supply chain. Watch commissioning pace in Sparks and ramp efficiency at Corpus Christi for cost traction. Policy volatility remains the swing factor for US demand and profitability.