After multiple rumors over the past 12 months, it seems that BYD's batteries will finally find their way into Tesla products, potentially even this year.
""We are now good friends with Elon Musk because we are preparing to supply batteries to Tesla very soon," said Lian Yubo, BYD's executive vice president in an interview with Kui Yingchun, an anchor with China's state-owned broadcaster CGTN."
As of now, there are no details about the supply agreement between BYD and Tesla, so we don't know the type of batteries, volume, timeframe or products in which the batteries would be used.
We can only guess that Tesla is interested in the BYD Blade Battery (long, LFP battery cells) and cell-to-pack (CTP) technology. However, the question is whether we are talking about the first version or about the latest version with the CTB (cell-to-body) structural battery system, first used in the upcoming all-new Seal model. There is only a small probability that BYD would supply Tesla with other chemistry types or cell form factors.
Another question is whether Tesla needs those LFP batteries for electric vehicles and/or for battery energy storage systems, like the Megapack.
Tesla currently has several battery suppliers, lithium-ion chemistries and cell form factors in use. With the addition of BYD, the situation would be even more interesting and complex.
This prompts another question of whether BYD Blade Batteries are so competitive that they are worth adding to Tesla's portfolio or if Tesla's battery demand is so high that it needs more LFP batteries from the market.
There is a value in simply adding BYD to the list of suppliers to get better prices/negotiation position from CATL (Tesla's existing LFP-battery supplier), although we would bet that the performance and value proposition of BYD's products is the key.
A quick look at the BYD Blade Battery: