’Nickel is our biggest concern’: Elon Musk on Tesla now producing cars with iron batteries

Tesla is planning to shift some of its cars to a type of battery that uses iron instead of nickel, the company's chief executive officer Elon Musk said on Thursday.

"Nickel is our biggest concern for scaling lithium-ion cell production. That’s why we are shifting standard range cars to an iron cathode. Plenty of iron (and lithium)!" Musk wrote on Twitter.

Musk had previously urged miners to produce more nickel. Supplies will be tight for the next three years, and there could be a significant deficit as early as 2023 as demand picks up, according to BloombergNEF analyst Allan Ray Restauro.

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Nickel is a key component in lithium-ion batteries, used in electric vehicles. It packs more energy into batteries and allows producers to reduce use of cobalt, which is more expensive and has a less transparent supply chain.

The metal has rallied 16% this year on the London Metal Exchange amid a broad-based rally in commodities, with investors betting on strong demand growth as economies reopen.

Tesla US factory closed

Meanwhile, Musk said the electric vehicle company's Fremont, California plant had to shut down for two days this week due to "parts shortages" and reopened on Wednesday.

"Fremont shut down for two days (parts shortages) & restarted yesterday," Musk said on Twitter.

Electric vehicle news source Electrek quoted Musk as telling employees that production of Model 3 and the Model Y small SUV would speed up to full production over the next few days.

"We are experiencing some parts supply issues, so we took the opportunity to bring Fremont down for a few days to do equipment upgrades and maintenance," Musk said in an employee email, according to Electrek.

Musk also said that the company was scaling up production of its more expensive Model S and Model X lines, which would soon go back to two shifts, he said, according to Electrek.

It was unclear how much volume or revenue Tesla would lose due to the production halt. The Fremont plant has an annual production capacity of 500,000 Model 3s and Model Ys combined.

Tesla last week reduced the price of its cheaper variants of the Model 3 and the Model Y, the latest in a series of price cuts at a time when legacy automakers are trying to fight back with new models.

With inputs from agencies.