According to media reports, on April 29, Zeng Yuqun visited the hotel where Elon Musk stayed in Beijing. The previous day afternoon, Musk arrived in Beijing at the invitation of the China Association for Promoting International Economic and Technical Cooperation.
Contemporary Amperex Technology Co. Ltd. (CATL) is one of Tesla's main battery suppliers, starting to supply Tesla since July 2020. In 2021 and 2022, Tesla was the largest customer of CATL, with a total lithium battery purchase of 51 billion RMB. In 2022, Tesla contributed 11.59% to CATL's total revenue.
On May 30 last year, Musk met with Zeng Yuqun. At that time, the content of the discussion between the two may include the supply of energy storage cell core to the Shanghai energy storage super factory, cooperation in building battery factories in North America in the future, and matters related to power battery supply. With the official start of the Shanghai energy storage super factory this year, CATL will provide battery equipment to Tesla's new battery factory in Nevada, speculation has been confirmed.
After a year, the two met again, which made people curious: what sparks will they produce this time? Could it be that they have another big move?
In fact, the relationship between Tesla and CATL can almost be described as a honeymoon period. The close cooperation between the two is not something new.
As early as February 1, Bloomberg reported, citing sources familiar with the matter, that Tesla planned to purchase equipment from CATL to open a factory to expand its battery production in Nevada and produce batteries for the large storage system Megapack.
The factory is initially planned with a production capacity of 10GWh, expected to start in 2025.
It is worth mentioning that CATL will only be responsible for equipment installation in it and will not participate in production operations, the factory will be 100% controlled by Tesla.
This also means that after the factory cooperation with Ford in the United States, CATL will once again adopt the LRS technology licensing model to enter the U.S. market, helping the host factory and even battery manufacturers quickly build battery factories.
In terms of time, there has been a long-standing cooperation between CATL and Tesla. CATL became Tesla's third power battery supplier after Panasonic and LG Chem in February 2020, and continued the cooperation the next year, supplying Tesla continuously from July 2020 to December 2025.
For CATL, Tesla is indeed a heavyweight cooperation partner.
In the first year of cooperation, this American God of fortune became CATL's largest customer and has remained so for three years to date.
From 2021 to 2023, CATL's sales to Tesla reached 13.039 billion RMB, 38.069 billion RMB, and 50.117 billion RMB, respectively, with the proportion of annual sales totaling 10.00%, 11.59%, and 12.50%, respectively, both the amount and proportion have increased.
From Tesla's perspective, the timing of the start of cooperation with CATL was a critical period when it fully transitioned to lithium iron phosphate batteries.
With the increasing demand for low-cost, high-safety batteries in the field of power and energy storage, CATL has been the top choice for Tesla as a global industry leader. Recently, Morgan Stanley, which had just upgraded CATL to overweight, has analysts like Adam Jonas pointing out in a new report about Tesla that the cooperation between Tesla and Chinese battery manufacturer CATL could change the game.
He believes that the American electric vehicle giant is seeking to manufacture cheaper electric vehicles, but needs to cooperate with China to achieve the expected lower price of around $25,000. Cost reduction is undoubtedly one of the core reasons why Tesla chose CATL.
Recently, contrary to the price war led by domestic car companies, Tesla's price increase has sparked a lot of discussion. Regardless of ex ternal reasons, it cannot be denied that Tesla is facing a serious problem of declining gross profit margin.
In the first quarter of 2022, Tesla's gross profit margin reached a peak of 32.9%, but had dropped to 18.2% last year.
Zeng Yuqun also mentioned in a public interview: Musk talks about costs all day long, I told him, I will definitely have a solution. In Tesla's Shanghai factory, Musk not only has efficient Chinese workers but also can purchase 95% of components locally.
CATL's battery pack base is located in Lingang, Shanghai, only 3 kilometers away from Tesla's Shanghai Gigafactory.
Returning to the meeting itself.
In the view of industry insiders, given that Drew Baglino, senior vice president of powertrain and energy at Tesla, recently resigned, the self-production process of the 4680 battery that Musk has high hopes for may encounter unprecedented setbacks. In addition, according to Tesla's quarterly report, its profit has dropped significantly. In light of these circumstances, Musk's meeting with Zeng Yuqun this time may seek more help in the 4680 battery aspect and cheaper power battery supply.
Currently, Tesla has one 4680 battery production line and one assembly line in operation, with two other assembly lines used to increase capacity, make improvement experiments, and debug equipment. In the third quarter of this year, Tesla will also build and install four 4680 battery production lines.
However, since the release of the 4680 battery by Tesla in 2020, in the four years that followed, the battery has been in the stage of ramping up capacity, and the battery performance has not been satisfactory. In terms of capacity, as of the end of March this year, the annual production capacity of the 4680 battery at the Texas Gigafactory had reached 6.2GWh. Compared with October 2023, this number has increased by 24%. But some domestic analysts in the United States are not satisfied with this, saying that Tesla took more than five months to increase the capacity by only 1.2GWh.
In terms of battery performance, Autoevolution pointed out that the performance of the 4680 battery used in Model Y produced at the Texas Gigafactory from 2022 to 2023 was not satisfactory. Consumers who purchased Model Y with the first-generation 4680 battery complained of long charging times, which may be due to the poor thermodynamic characteristics of the larger battery.
Therefore, Tesla has made improvements in design and used the second-generation 4680 battery on the Cybertruck. Charging speed is still the focus of external attention, and many people hope to improve charging speed by switching to an 800V architecture, but there is currently no data on whether this change is effective.
In the past year, CATL has been focusing on and excelling in fast-charging battery technology. At last week's Beijing International Auto Show, CATL launched the world's first lithium iron phosphate battery with both 1000 km of endurance and 4C fast charging characteristics—the Shenxing PLUS battery.
According to CATL, compared with the Shenxing battery launched in August last year, the Shenxing PLUS battery has made further progress in endurance and fast charging capabilities. It provides users with a super long endurance experience of up to 1000 km, and can charge 600 km in 10 minutes, truly achieving a super fast charging rate of 1 second and 1 km.
Regarding the 4680 battery, Zeng Yuqun previously revealed that CATL's 4680 battery has better performance than its competitors' battery performance.
In fact, the two parties have laid the groundwork for battery technology cooperation. In March, Zeng Yuqun revealed in an interview with the media in Hong Kong that CATL and Tesla will cooperate in the development of power batteries with faster charging speeds. Therefore, whether CATL and Tesla will further cooperate in the 4680 battery technology remains a topic of further observation.
In addition, the cooperation between the two parties in energy storage batteries is also expected to strengthen. Tesla's energy storage super factory in Shanghai is scheduled to start construction in May this year and achieve mass production in the first quarter of 2025. This is Tesla's first energy storage super factory project outside the United States, specializing in producing its energy storage product Megapack, mainly for large enterprises and public utilities.
CATL is an important energy storage cell core supplier for Tesla, and it is highly likely that the Tesla Shanghai energy storage super factory will also use CATL's energy storage cell cores for the production of energy storage products. In March of this year, Zeng Yuqun mentioned in interviews with media such as Bloomberg that CATL and Tesla are conducting several potential collaborations, including negotiations on battery technology licensing cooperation with Tesla. This may be one of the topics of discussion between Zeng Yuqun and Musk at this meeting.
Zeng Yuqun has publicly mentioned several times this year about the technology licensing cooperation model and sees it as an important way to address geopolitical challenges. Ford is the first cooperation partner of CATL's technology licensing co-built factory. The two sides announced this cooperation in Michigan, the United States in February last year. Ford is building a battery factory in Michigan and owning it, while CATL is providing construction and operation services and authorizing battery patent technologies.
The U.S. government issued the Foreign Sensitive Entity Guide in December last year, clarifying that vehicles with battery components manufactured or assembled by foreign sensitive entities will lose the eligibility for tax exemptions provided by the Inflation Reduction Act. This move aims to further prevent China's power battery industry chain from benefiting from subsidies under the Inflation Reduction Act. This potential risk may make U.S. automakers purchasing CATL batteries unable to enjoy government subsidies. The technology licensing cooperation model can avoid the above risks, thus becoming an important option for CATL to enter the U.S. market.
CATL just launched its new fast-charging battery this month. The battery named Shenxing PLUS has an endurance capacity of 1000 km and a fast charging capability of charging 600 km in 10 minutes. CATL released the Shenxing battery last August, which focuses on fast-charging performance. The Shenxing PLUS released this time is an upgraded version, with improvements in endurance and fast charging capabilities. Tesla is currently not listed as a customer of the two fast-charging battery products from CATL. Further cooperation in fast-charging battery technology may also be on the discussion list between Zeng Yuqun and Musk at this meeting.
In the battery technology arena, both Tesla and CATL have their own unique skills. And their cooperation will undoubtedly open up new paths for the future of electric vehicles. The industry may as well wait and see how these two kings work together to write a new chapter in electric vehicles.
This article is from the WeChat official account: Car Intelligence Institute (ID: EV100_Plus), author: Wu Yu