Tesla is reportedly in talks with CATL, China’s number one battery cell manufacturers for electric vehicles, in order to supply batteries for Model 3 vehicles produced at Gigafactory 3 in Shanghai.

Bloomberg reported on the discussions earlier today:

“CATL has been discussing the required specifications for the batteries with Tesla officials, the people said, asking not to be named because the talks are private. Still, there’s no guarantee that an agreement will be reached, according to the people.”

CATL is primarily using LiFePo and NCM chemistries in prismatic cell formats and their batteries have been mostly going to electric bus production and plug-in hybrids.

They will need to branch out to cylindrical cells, the use of which Tesla has been pioneering for electric vehicle battery packs.

The Chinese company has been expanding its reach lately and announced several new battery factories to support major automakers.

CATL signed a supply contract with SAAB successor National Electric Vehicle Sweden (NEVS) in order to enable the production of hundreds of thousands of all-electric cars per year.

BMW also signed a $1 billion battery supply contract with them to support their future EV production.

They have also secured a battery supply agreement with Honda for about 1 million electric vehicles.

CATL reportedly has a current annual production of 17.5 GWh and they are planning a new factory with a capacity of 24 GWh to come online as soon as next year.

They are planning to raise as much as $2 billion in an upcoming IPO to finance their growth.

Electrek’s Take

I’m sure Tesla is talking with several battery cell suppliers in China right now, including CATL.

Originally, Tesla was planning to produce both cells and full vehicles at Gigafactory 3, but they had to accelerate their plans due to the trade war and decided to focus on the vehicles.

Sourcing the cells entirely from a third-party is indeed likely going to save them time, but it’s still going to be extremely difficult to find a supplier able to deliver cells to the Model 3’s specification in time for a start of production later this year.

Honestly, I’d be surprised if they can do it in any significant volume.

What do you think? Let us know in the comment section below.

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