Tesla (TSLA) Discussing a Low-Cost Battery Supply Deal With China's EVE - Report

May 14, 2021 6:23 AM EDT

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Tesla (NASDAQ: TSLA) is reportedly holding talks with the China-based battery maker EVE Energy Co over a potential partnership that will see the Chinese company supply Tesla’s Shanghai factory.

Although lithium iron phosphate (LFP) batteries offer a shorter range than nickel/cobalt batteries, they are cheaper to produce. CEO Musk indicated earlier that TSLA was shifting standard range cars to an iron cathode amid growing concerns over the supply of nickel.

In case two companies are able to reach an agreement, EVE would become the second LFP partner for Tesla after Contemporary Amperex Technology.

According to Reuters, the two companies are looking to finalize the deal in the third quarter this year as they are already in the advanced stage right now. Tesla could reportedly start using EVE's LFP batteries in its China-made Model 3 and Model Y units.

Shares of the Chinese battery company jumped more than 10% in China today on the news.

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