Tesla to launch China-made Model 3 cars with cobalt-free LFP batteries: Sources

US electric vehicle maker Tesla Inc is poised to start selling some Model 3 vehicles made in China equipped with cobalt-free lithium iron phosphate (LFP) batteries, two people familiar with the matter said.

Currently the Model 3 electric sedans made at the carmaker's Chinese plant use nickel-manganese-cobalt (NMC) batteries. The starting price for the vehicles is currently 271,550 yuan ($39,900) after factoring in government subsidies.

Tesla will announce the product change as early as Thursday, the two sources said. They declined to be named as the matter is confidential.

Tesla was not immediately available for comment.

LFP batteries are cheaper to make and contain no cobalt, one of the most expensive metals used in electric vehicle batteries. Tesla will use LFP batteries in all Model 3 vehicles made in China with standard driving ranges, according to the sources.

In China, the world's biggest car market, Tesla sold over 11,000 vehicles, mostly Model 3s, in August. It is also building a new car manufacturing capacity for Model Y sport-utility vehicles in Shanghai and expects to start delivery of them from next year.

Reuters has previously reported that Tesla would use LFP batteries made by China's CATL, which declined to comment at the time.

($1 = 6.8090 Chinese yuan renminbi)