Tesla, through its Chinese arm, partnered with BYD’s battery subsidiary FinDreams to secure battery cell supply for its upcoming Megafactory in Shanghai, local news outlet Late Auto reported, citing individuals familiar with the matter.
Tesla taps FinDreams for battery cell supply
According to the report, FinDreams agreed to supply more than 20% of battery cells for Tesla’s Megapack production in the new Shanghai Megafactory.
Tesla’s Shanghai Megafactory will start taking delivery of FinDreams’ battery cell supply by the first quarter of 2025.
Notably, Tesla China also tapped battery giant CATL to secure a sufficient supply of battery cells for its Megapacks. CATL will reportedly be the Shanghai Megafactory’s primary battery supplier.
FinDreams’ LFP batteries align with Tesla’s cost-reduction strategy
FinDreams managed to close the deal with Tesla China because it offered a price close to their production cost, according to the report.
FinDreams is expected to supply roughly 8 GWh of batteries to the upcoming Shanghai Megafactory annually, considering the facility’s overall capacity target of 40 GWh.
As reported by CnEVPost, Tesla’s annual battery cell order value from FinDreams could cost up to RMB 3.5 billion ($483 million) based on market prices.
In 2021, Tesla shifted from high-cost lithium ternary batteries to low-cost lithium iron phosphate (LFP) batteries. It also gradually replaced LG Energy Solution with CATL as its primary battery cell supplier.
Throughout last year, CATL was the sole supplier of Tesla’s battery cells. Tesla seems to have partnered with FinDreams for more supplies to further balance costs and yield more bargaining power.
“BYD offers the best price, which is close to the cost, to Tesla.”
Unnamed source
Shanghai Megafactory construction progress
Tesla China broke ground at the new Shanghai Megafactory’s site in May. It is on track to become the company’s inaugural battery energy storage factory outside the US.
As of now, the Musk-led EV maker has one Megafactory in Lathrop, California. As the name suggests, the upcoming Shanghai Megafactory will also only crank out Megapacks grid-scale batteries.
Tesla expects the new facility to hit an annual production capacity of 40 GWh or approximately 10,000 Megapack units.
“The plant will be a very important production and export base, just like Tesla’s Shanghai gigafactory.”
Tesla Vice President Tao Lin said at a ceremony to mark the start of construction
All that said, Tesla’s energy business is advancing as a strong revenue prospect for the American company. As Chief Executive Elon Musk revealed in the Q1 2024 Earnings Call, the Megapack propelled Tesla Energy’s record-breaking profitability.
The imminent launch of Megapack production in China would significantly help Tesla compete with BYD in the energy storage space. For reference, FinDreams deployed 28.4 GWh of battery capacity in 2023, indicating a whopping 136% growth over the prior year.
