Tesla (NASDAQ: TSLA) is planning to expand its battery facility in Sparks, Nevada, to bring more low-cost lithium iron phosphate battery (LFP) supply chains to the United States。

According to reports, the electric vehicle manufacturer will purchase idle battery production equipment from its Chinese supplier Ningde Times (CATL) (SZ: 300750), with an initial production capacity of about 10 GWh。To date, Tesla, the Nevada Economic Development Authority, and Ningde Times have not responded to Reuters' request.。

Behind the move is U.S. regulations that limit the extent to which companies rely on countries such as China to supply components needed for batteries such as nickel, cobalt and lithium.。This year, Tesla's cheapest model, the Model 3 small sedan, lost the tax benefit of buying an electric car under the Inflation Reduction Act due to new battery material purchase restrictions taking effect.。

China is currently home to the largest LFP battery manufacturers, including BYD (SZ: 002594) and Ningde Times, which supply batteries to Tesla.。Panasonic (OTC: PCRFY) has partnered with Tesla in Gigafactory, Nevada, to invest in production equipment that Japanese suppliers will use to produce and distribute batteries for the electric car maker.。