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Chinese EV battery maker CATL becomes Tesla’s new battery supplier

Written by Sun Henan Published on   2 mins read

The company is China’s largest electric vehicle (EV) battery maker.

Chinese leading electric vehicle (EV) battery maker Contemporary Amperex Technology (CATL) has signed a battery supply agreement with US-based EV firm Tesla, the company said in a stock exchange filing on Monday.

Starting from July 2020, the two-year agreement will allow Tesla to purchase CATL’s batteries based on its own needs as the battery maker will not impose any restrictions on the purchase volume, according to the filing.

Rumors about the partnership between CATL and Tesla have been floating for almost a year. The two companies were reportedly in talks to establish a battery supply deal in March 2019 for Tesla’s first China-made vehicle from its Shanghai Gigafactory 3, the Model 3 sedan. In November, Tesla entered a preliminary agreement to start using batteries from CATL on vehicles made in China, as reported by Bloomberg.

Tesla’s CEO Elon Musk said during an earnings call last week that both CATL and South Korea-based LG Chem will become Tesla’s new battery suppliers, in addition to its long-time key producer Panasonic, to ensure the battery supply chain as Tesla’s production ramps up in China.

Tesla’s first plant outside of the US, the Shanghai Gigafactory 3, has started producing the Model 3 at a run-rate of 3,000 vehicles per week, and the first batch of the model was handed to Tesla’s employees in December 2019. The Shanghai plant is targeting an annual capacity of 500,000 cars.

CATL, headquartered in the city of Ningde in eastern China’s Fujian province, is the battery supplier of local startups like Nio, as well as global automakers such as BWM, Volkswagen, and Daimler. The company is China’s largest EV battery maker, accounting for more than 50% of market share in 2019, according to local media 36Kr, citing data from research agency Gaogong Lidian.

The battery maker is enlarging its production capabilities inside China by setting up a joint venture with First Automotive Works (FAW), China’s oldest automobile manufacturer. The new joint venture will invest RMB 4.4 billion (USD 652.5 million) in a battery project located in Ningde, KrASIA reported. The company is also seeking global expansion by establishing branches in the US, Japan, France, and Germany.

36Kr is KrASIA’s parent company. 


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