Tesla secured a preliminary agreement with China-based battery supplier Contemporary Amperex Technology Co. Limited (CATL) for its Model 3 production in Gigafactory 3. CATL may also become one of Tesla’s global battery suppliers in the future, based on statements from people privy to the companies’ discussions.  

Elon Musk and CATL Chairman Zeng Yuqun met for 40 minutes during the Tesla CEO’s visit to Shanghai in late August. During the brief meeting, Musk and Yuqun seemed to have reached a non-binding agreement for CATL to supply batteries for China-made Model 3 units, reported Bloomberg. 

An official agreement may be finalized and signed by mid-2020, but nothing is set in stone yet. Musk and Yuqun still need to discuss finer details of their partnership, like how many batteries Tesla will order for Gigafactory 3 production. CATL’s future as a global battery supplier for Tesla also needs to be discussed, although it may not have any bearing on the battery company’s role as one of the suppliers for China-made Model 3 units. 

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. 

Credit: Tesla

Since Tesla China and CATL don’t have an ironclad agreement yet, China-made Model 3 sedans will be fitted with LG Chem and Panasonic batteries in the meantime. This will change if Musk and Yuqun make an official agreement. 

Gigafactory 3 has already started trial production. Tesla Global’s VP Grace Tao announced the Shanghai factory is expected to assemble 3,000 Model 3’s per week once it receives the green light. Tesla Chairwoman Robyn Denholm is in Shanghai this week for the 2019 CIIE and stated that GF3 is waiting for its manufacturing license. Without it, Gigafactory 3 won’t be able to make Model 3 deliveries. 

However, Tesla China seems confident it will receive its manufacturing license in time to start full production by the end of the year. The Shanghai-based facility already announced an official release date for China-made Model 3 units. Based on the announcement, Model 3 reservation holders may receive their all-electric sedan before the end of Q1 2020.