Multiple news sources are reporting that Tesla has begun using lithium-iron phosphate (LFP) battery cells in its Megapack grid-scale storage systems. LFP has some advantage and disadvantages when compared to the traditional nickel cobalt aluminum (NCA) or nickel, manganese, cobalt (NMC) batteries typically used to power electric cars.

The advantages include not using nickel or cobalt, both of which are going up in price as the demand for electric cars accelerates. In addition, mining cobalt has significant environmental and humanitarian issues. Leaving those elements out helps lower the cost of manufacturing battery cells.

The downside is that LFP batteries are less energy dense than traditional battery cells, which is why they are a perfect fit for the entry level Tesla Model 3 Standard Range + in China but not for the mighty Model S P100D with Plaid+ Mode. The change in battery chemistry was alluded to by Elon Musk in the most recent conference call with investors. “However, stationary storage, the energy density is not as important because it’s just staying on the ground, and so I think the vast majority of stationary storage will be iron-based lithium-ion cells with an iron phosphate cathode, technically. But the phosphate part is unnecessary. It’s really just the iron or nickel.”

Each Megapack has a maximum energy capacity of 3 MWh, making it one of the largest energy storage systems on the market. With its shipping container size enclosure, it can be installed quickly and scaled easily to meet the needs of  individual customers. Tesla says the Megapack requires 40% less space and 10× fewer parts than storage battery systems available today from its competitors.