Tesla in Tentative Battery Supply Deal with CATL

Bill Hampton

Tesla Inc. has completed a non-binding deal to buy batteries for electric cars it makes in China from the country’s CATL (Contemporary Amperex Technology Co. Ltd.).

The tentative agreement was made in August but isn’t likely to be signed until next summer, sources tell Bloomberg News. They caution that the pact could collapse before then. The sources say Tesla and CATL also are discussing a separate global battery deal.

Tesla would use CATL’s batteries in Model 3 electric sedans produced at the carmaker’s new factory outside Shanghai. The $2 billion plant hopes to reach weekly output of 1,000 cars by the end of this year and eventually reach annual production of of 300,000 units.

Until arrangements with CATL are finalized, Tesla’s Chinese plant will buy batteries from LG Chem and Panasonic, according to Bloomberg. Tesla has said that its factory eventually will produce its own batteries.

Tesla hopes to begin making the Model Y, a crossover variant of the Model 3, at the China facility next summer.