(RTTNews) - Tesla Inc., which now produces electric vehicles from China Gigafactory 3, signed a battery supply agreement with major Chinese electric vehicle battery maker Contemporary Amperex Technology Co Ltd. or CATL.
During its fourth-quarter conference call, Tesla had said that apart from key partners like Panasonic for batteries, the company has added some additional partners that are small at scale with LG and CATL.
Citing CATL stock exchange filing, Reuters reported that CATL has signed a 2-year deal with the US electric vehicle maker. Tesla will decide the volume of battery purchase between July 2020 and June 2022, as per its own requirements.
The company, which delivered its first set of cars built in the Model 3 factory in China on December 30, had reduced its prices in the country, which is the world's largest market for automobiles, especially electric vehicles.
Elon Musk, Tesla Co-Founder and Chief Executive Officer, recently said, "...the affordability of our car in China improved radically because of very - tariffs mostly gone away, purchase tax exemption, local cost supply, not having to spend a bunch of money to transport it over the ocean."
Tesla's $2 billion Shanghai factory is its first plant outside the United States. In China, the company has been producing 1,000 vehicles a week, with plans double that rate soon. The company estimates that the production line at the Chinese factory will have a capacity of 150,000 units annually.
Tesla had said earlier that 30 percent of its China supply chain was localized, and that it expects to completely localize its supply chain in Shanghai by the end of the year. The planned localization is expected to help the company to cut price more in the year.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.