Tesla is looking to BYD for extra battery supply

As a move for Tesla’s Shanghai Gigafactory to continue trying to meet electric vehicle demand, the company will apparently get some of its batteries from a fellow automaker in China. BYD, which makes both gas and electric vehicles, also unveiled a less bulky “blade battery” for EVs in 2020, and Tesla has officially added them to its list of suppliers.

Warren Buffett-backed automaker BYD is preparing to supply Tesla with EV batteries “very soon,” according to statements from a senior executive reported by Reuters. The statement was made on China’s state media to anchor Lian Yubo, and confirms earlier reports of talks between the two companies.

"We are now good friends with Elon Musk because we are preparing to supply batteries to Tesla very soon," said BYD Vice President Lian Yubo to state media’s Kui Yingchun.

BYD’s blade battery is a lithium-iron phosphate (LFP) battery with a smaller overall build than Tesla’s current batteries. The automaker said that around half of its cars made in the first quarter of this year were LFP batteries, which are generally cheaper than the nickel and cobalt cells more commonly used throughout many Western countries. Tesla receives most of its nickel and cobalt battery cells from Panasonic, which has a cell production line at Tesla’s Nevada location, and LG Energy Solutions, which is based in South Korea.

Rumors held that BYD and Tesla were talking about a battery supply relationship as early as last year, though this is the first time a company spokesperson announced the deal. Tesla’s Shanghai Gigafactory currently gets its electric vehicle batteries from CATL, which is also the world’s largest EV battery manufacturer. The partnership will make BYD Tesla’s second supplier of LFP batteries at Giga Shanghai.

In addition to being smaller, BYD Chairman Wang Cuanfu says the blade battery is also safer and less likely than other alternatives in the market to catch on fire. This problem has been a general concern for consumers looking to switch to EVs, but it has also plagued a few automakers — Chevy, for one, which had to recall every Chevy Bolt EV ever made last year due to potential fire risks. EV development is in its infancy, and while fire risk remains a factor, it could become increasingly irrelevant as new designs offer safer alternatives — like BYD’s blade battery.

With the burgeoning EV industry, demand for zero-emission vehicles is at an all-time high, and that trend is only expected to increase in the coming years as legacy auto follows suit with Tesla. However, high vehicle demand means supply will need to keep up, and Tesla’s move to work with BYD for battery supply just shows that the automaker needs every battery cell it can get its hands on right now.

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