Tesla has confirmed its partnership with CATL and LG Chem for the EV company’s battery cell supply in Giga Shanghai. Elon Musk hinted at Tesla and CATL partnership during the company’s Q4 2019 Earnings call.
According to Reuters, Tesla’s partnership with LG Chem and CATL for Giga Shanghai's battery supply is at a smaller scale compared to its agreement with Japan’s Panasonic Corp. LG Chem declined to comment on the matter, and the publication did not receive a response from CATL.
Elon Musk dropped a hint about Tesla’s agreement with CATL during the latest earnings call when New Street Research analyst Pierre Ferragu asked about the company’s progress in battery production capacity. Musk said that its partnerships with key partners like Panasonic, LG Chem, and CATL had a lot to do with Tesla’s battery development.
Tesla and CATL’s partnership is reportedly in preliminary negotiations, based on the last news about the two company’s plans with each other. However, Tesla did confirm that local battery pack production began in late December 2019 in its Q4 2019 Vehicle Production and Delivery report. Elon’s comments during the earnings call support these claims. Now, Tesla has confirmed the news.
Gigafactory 3’s Phase 1.5 where Tesla’s batteries and powertrains appears to be nearing operational stage. The battery facility’s shell is complete. Given the amount of time Tesla China finished Phase 1 of Giga Shanghai, the battery facility may be up and running pretty soon.
Currently, Tesla is still supplying battery packs to Giga Shanghai for the MIC Model 3. Once Tesla gains the capability to produce enough battery packs for the locally-made Model 3, it will become more efficient and may be beneficial for the company’s margins.
In August 2019, Elon Musk met with CATL’s Chairman Zeng Yuqun for 40 minutes in Shanghai. Their meeting was short, but the two company heads seemed to have reached a non-binding agreement for CATL to supply batteries to Giga Shanghai.
Back then, an official agreement between Tesla and CATL was expected to be signed by mid-2020. In hindsight, the two companies finalized their partnership much sooner.
Compared to Tesla’s other battery suppliers such as Korea-based LG Chem and Japan-based Panasonic, CATL is a relatively young energy company. However, CATL has a very impressive client base, including NIO Inc., Volkswagen AG, and Daimler AG. So Tesla may not feel like the odd one out with CATL.
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