Largest Chinese Electric Vehicle Manufacturer Plans to Supply Batteries for Elon Musk's Tesla

BYD, one of the largest automotive manufacturers based in China, recently announced that they would soon develop and provide car batteries to Elon Musk's firm Tesla 'very-soon.' The company's senior executive relaid the statement through a state-owned broadcasting group.

BYD executive vice president Lian Yubo explained in an interview that their firm respects and admires the success of Elon Musk and his car company Tesla.

BYD and Tesla 'Good Friends,' Executive Says

(Photo: STR/AFP via Getty Images)
Tesla boss Elon Musk speaks during the ground-breaking ceremony for a Tesla factory in Shanghai on January 7, 2019. - Musk presided over the ground-breaking for a Shanghai factory that will allow the electric-car manufacturer to dodge the China-US tariff crossfire and sell directly to the world's biggest market for "green" vehicles.

According to a report by CNN, Yubo said that their group is now in close ties with the SpaceX CEO. Their fruitful partnership would start with BYD supplying Tesla with batteries for electric cars soon, Yubo added.

Tesla and BYD did not respond to any questions sent by CNN Business. As of today, there is still no update regarding the unexpected collaboration between the two electric car giants.

BYD is the best developer and top producer of lithium iron phosphate batteries or LFPs. Since its surge in 2020, the technology has been dubbed the 'Blade Batteries.' The same power source is installed in the vehicles created by BYD themselves. In recent years, the Chinese automotive firm started collaborating with other large car makers, such as the Japanese multinational enterprise Toyota.

BYD says that their Blade Battery innovation comes in a more compact, thinner, and longer physical design than the traditional lithium iron cells in many cars today. The blade-shaped batteries give additional space for the machine of electric cars, let the vehicle perform much more efficiently, and are less likely to be consumed by fire when inflicted by intense damage.

Almost half of Tesla cars run on LFP batteries. The majority of this equipment is produced by a separate China-based company called CATL. Other models use nickel and cobalt batteries supplied by LG Energy Solution and Panasonic.

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Partnership Between Electric Vehicle Giants

Elon Musk's Tesla was the top producer of electric cars in China this year. It ranked the most compared to its competitors, which also focused on pure-electric vehicles.

Last March, Tesla was able to produce 65,814 vehicles from its factory located in Shanghai. The majority of these cars were sold to the Chinese market alone. Based on their records, Tesla was able to reach sales in the region by 85 percent from a year ago.

However, the sales immediately dropped by 95 percent the following month due to the largest COVID outbreak in Shanghai. Many businesses located in the city were affected by the lockdown.

BYD was fortunate, as its production lines were not hit by any of the largest lockdowns in the country. By April, the company became the biggest seller of new energy vehicles, beating records with its 106,000 sold units.

Analysts say that BYD's advantage was made possible through their 'vertical integrated supply chain' that allowed them to incur less impact from the series of lockdowns in China while their competitors changed their production strategies due to the costs of battery and chip shortages.