Tesla showcases its models at the 2nd China International Import Expo in Shanghai in November 2019. (Photo by Li Fusheng/China Daily)
U.S. electric carmaker Tesla announced a partnership with CATL, China's largest power battery producer, on Thursday, prompting insiders to call the deal a win-win situation.
According to Tesla, CATL has become its third power battery supplier, following Japanese power battery manufacturer Panasonic and South Korean battery marker LG Chem. More details about its collaboration with CATL will be disclosed in April.
Joining hands with China's leading battery maker was Tesla's response to a large demand for power batteries in developing the Chinese market, according to auto portal Gasgoo.
With the establishment of its gigafactory in Shanghai and the delivery of its China-made Model 3 vehicles, Tesla is working to expand its battery supply, in a bid to reduce trade risks and improve the company's bargaining power. In 2019, Tesla delivered 367,500 units of vehicles in total, witnessing a year-on-year growth of 50 percent. In the fourth quarter of last year, the U.S. electric carmaker delivered 112,000 vehicles worldwide, reaching a record high.
On Wednesday, Tesla said it generated a total revenue of 7.38 billion dollars in the fourth quarter of fiscal 2019, up 2 percent from the same period of 2018.
In addition, collaborating with CATL in supplying power batteries is expected to help Tesla cut costs while improving its output.
The China-made Model 3 and Model Y vehicles in Tesla's Shanghai gigafactory will be more competitive by adopting CATL batteries, analysts said.
For CATL, the partnership with Tesla will further improve its market share in the new energy vehicle market and enhance its overall competitiveness, analysts said.
According to the China Automotive Battery Industry Innovation Alliance, a total of 62.2 gigawatt-hours of batteries were installed in China last year, of which 31.46 GWh came from CATL. The battery maker secured more than 50 percent of the country's market share.
Before teaming up with Tesla, CATL worked with an array of bigname automakers, including Mercedes-Benz, BMW, Volkswagen, Toyota, Volvo, Geely, SAIC, BAIC and GAC Group.
CATL has also accelerated its overseas development. The company started the construction of its first overseas factory in Erfurt, Germany last year.
The plant will produce both battery cells and modules for CATL's European partners.
The factory is expected to be the largest lithium battery plant in the country, with a designed production capacity of 14 GWh by 2022.