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Tesla (TSLA) stock has reacted positively to the news about the company’s talks with CATL, a Chinese producer of cobalt-free batteries.
News from the leading electric car manufacturer Tesla: the company is negotiating the deal with CATL, a Chinese producer of batteries for electric vehicles. Tesla is planning to use CATL’s cobalt-free batteries in cars that its Shanghai plant in China produces. As a result of the announcement, Tesla (TSLA) stock soars. In several hours, it increased by 7.30% and makes up $858.40 per share.
In the pre-market, it continues to rise. Now the TSLA pre-market price is over $915.
It’s also worth mentioning that Tesla (TSLA) stock has been rising continuously since the beginning of 2020. Tesla stock is up around 91% this year in a leap that is majorly attributed to a short squeeze, good results, and the opening of a key new factory in china. As Tesla stock soars, it speeds toward $1,000. By the end of 2020, the company has all the chances to live up all the optimistic projections about the stock price.
Prospective Tesla Partnership with CATL
Neither Tesla nor CATL commented on the ongoing talks. However, those familiar with the matter agreed to share some information. According to some sources, the deal would be the first time a US car producer uses so-called lithium iron phosphate (LFP) batteries. Notably, Tesla has been in talks with China’s CATL for over a year now. The company aims to reduce production costs amid faltering overall EV sales in China. Therefore, Tesla has long been looking for a supplier of LFP batteries.
EV manufacturers usually use nickel-cobalt-aluminum (NCA) or nickel-manganese-cobalt (NMC) batteries on passenger cars. These batteries boast higher energy density, which means the vehicles can drive quite far on a single charge. As for CATL, the company strives to boost the density and safety of its LFP batteries. Therefore, it has been working on its so-called cell-to-pack technology.
For Tesla, using CATL’s batteries will enhance the production of Model 3 cars at its new $2 billion Shanghai plant. Tesla started delivering cars from this factory in December. After building the plant, Tesla has been saving a lot on shipping costs and tariffs for imported models. Currently, the factory in Shanghai is seeking regulatory approval to build its longer-range Model 3 cars.
The move will also result in cutting prices and gaining a market share from conventional premium automakers. As a result, Elon Musk will keep his promise made in 2018. He once said that his company would lower the use of cobalt (roughly $33,500 per tonne) to “almost nothing”.
In April, Tesla plans to hold a battery event. There, Elon Musk will share the company’s future battery strategy and technology.