Contemporary Amperex Technology Co. Ltd. (CATL) is an EV battery producer out of China, and the world's largest of its kind. It supplies batteries for a number of global electric car makers, and it's now willing to offer lower prices for its strategic clients. However, Tesla, its largest customer, reportedly won't benefit from the cost cuts.
According to an article published by CnEVPost and cited by Electrek, CATL was responsible for a whopping 37% of all EV battery sales across the globe in 2022. The Chinese battery maker announced that it will provide strategic customers, including Huawei, Li Auto, NIO, and Zeekr with a battery price deal. NIO also signed a special five-year strategic agreement with CATL in January 2023.
It seems that even though Tesla is CATL's biggest client, it's not included in the current list of "strategic" customers for this particular deal. Perhaps this has something to do with Tesla being a US automaker, as those listed above are all domestic carmakers in China. However, there are more details that may make this all make more sense.
Essentially, automakers will have to agree to purchase 80% of their EV batteries from CATL. If they're willing to sign into the strategic partnership, they'll be rewarded with markedly lower battery prices. CATL has said it's willing to agree to a set price of RMB 200,000 ($29,116) per ton of lithium carbonate over the course of the next three years. The price cuts are expected to kick in starting in Q3 2023.
CATL's battery prices per ton of lithium carbonate right now come in at around RMB 470,000 ($68,427), so the deal is clearly significant. In order to help offset the discount, CATL is also asking that its battery materials suppliers cut their prices by 10%.
Based on information published by Electrek, a closer look at the deal shows that some non-Chinese automakers may also benefit from CATL's deal, so why not Tesla?
The US EV maker is already part of a previous battery pricing agreement with CATL that runs until 2025. However, Tesla also makes its own batteries, it's partnered with Panasonic, and it leans on several other battery producers to help it meet its needs.
To think that Tesla would be willing to promise that it will purchase 80% of its EV batteries from CATL over the next three years would be arguably ludicrous. In addition, as automakers work to meet the requirements of the newly revamped US federal EV tax credit, domestic battery materials sourcing and domestically produced EV batteries should take precedence over those from foreign companies.