Tesla Reaches Preliminary Battery-Supply Deal with CATL

This is big.

Tesla Inc. has reached a preliminary agreement to start using CATL as a battery supplier for cars made in China from as early as next year, and the companies are in talks to expand the relationship globally, according to people familiar with the matter.


Globally, you say? Interesting… does that mean we could start seeing CATL cells in Europe, or even the US?

Following months of negotiations, the companies clinched a non-binding deal after Tesla Chief Executive Officer Elon Musk traveled to Shanghai in late August and met with CATL Chairman Zeng Yuqun for about 40 minutes, according to the people, who asked not to be named discussing private deliberations. Though a final agreement is expected to be signed by mid 2020, there is no guarantee that will happen, the people said.


To give you some context on this, CATL is the world’s larger provider of EV, HEV, and PHEV battery solutions, followed by Panasonic. Tesla has now secured cell supply from LG Chemical and CATL, in addition to their relationship with Panasonic for existing US cars. They are also rumored to be making their own Tesla designed battery cells.

This is a big deal. CATL can deliver a large volume of lithium ion cells to help Tesla make all the cars they need. With multiple suppliers, Tesla’s global supply chain will be far more resilient than it was when they were depending on one exclusive partner for battery cells.

The batteries would go into Model 3 cars produced at Tesla’s factory near Shanghai, which is slated to begin operating this year. But the companies still need to iron out details such as how many batteries Tesla will purchase, and separate discussions are underway on a potential global supply contract, the people said. Tesla will use batteries from Panasonic Corp. and LG Chem Ltd. in China in the meantime, one of the people said.


Read the full story on Bloomberg

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