As Tesla hustles forward with its efforts in China, it still has a few details to shore up. In addition to obtaining an official license to actually manufacture its electric vehicles at Gigafactory 3 in Shanghai, it also must secure a battery supplier for the operation.

When it comes to the future of EV adoption, batteries are key. In fact, EVs are much simpler overall than traditional gas-powered cars, which makes their batteries virtually the only primary component in terms of manufacturing, pricing, and availability.

Tesla plans to begin building Model 3 sedans in China for the Chinese market in the coming months. Eventually, the Silicon Valley automaker will also produce China-bound Model Y crossovers at Gigafactory 3 as well. As far as high volume EV production is concerned, having a solid and established deal with a local battery supplier is of the utmost importance.

According to a recent report via Bloomberg:

"Tesla Inc. has reached a preliminary agreement to start using CATL as a battery supplier for cars made in China from as early as next year, and the companies are in talks to expand the relationship globally, according to people familiar with the matter."

If true, it seems CATL may not only supply Tesla with batteries for China-based EV manufacturing, but also on a global level. Sadly, however, as shared above, this information is once again coming from "people familiar with the matter." We've heard this before in many cases and especially related to a Tesla / CATL deal, so we're not holding our breath, but the potential deal really does make perfect sense. Bloomberg went on to report:

"Following months of negotiations, the companies clinched a non-binding deal after Tesla Chief Executive Officer Elon Musk traveled to Shanghai in late August and met with CATL Chairman Zeng Yuqun for about 40 minutes, according to the people, who asked not to be named discussing private deliberations. Though a final agreement is expected to be signed by mid 2020, there is no guarantee that will happen, the people said."

For the time being, it appears Tesla will be using batteries from Panasonic and LG Chem for its initial China-built Model 3 vehicles.

As this is a developing story, we'll keep you apprised when and if we receive more concrete details.

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