BYD has started supplying electric vehicle batteries to Tesla’s factory in Germany, Chinese media outlet Sina Tech reported on Wednesday.

Why it matters: This is the latest development in the partnership between Tesla and BYD, two of the world’s biggest EV makers. It comes two months after a BYD executive confirmed to state broadcaster CGTN that the Chinese manufacturer would supply batteries to Tesla “very soon.”

Details: For the first time, BYD begins supplying its “blade battery” to Tesla’s gigafactory in Berlin, with the first batch of Model Y vehicles with BYD batteries expected to roll off assembly lines by early September, Sina Tech reported, citing people familiar with the matter.

  • It is unknown whether Tesla plans to equip its EVs with BYD batteries at its Shanghai facility, the sources said. Tesla and BYD did not respond to TechNode’s request for comment.
  • BYD’s blade battery comes with a lithium-ion phosphate (LFP) makeup and boasts better thermal stability and stronger resistance to collisions than lithium-ion batteries that use cobalt or nickel and which enable longer range but at a higher cost.

Context: A growing number of Chinese automakers are preferring LFP battery chemistry to traditional cobalt- and nickel-based batteries due to lower costs, better safety, and improving energy density, a trend analysts expect to accelerate globally.

  • During an online media briefing on Wednesday, UBS analyst Paul Gong said that the Swiss investment bank expects LFP batteries to capture more than 40% of the global EV battery market by 2030, an increase from its previous estimate of 25%.
  • The blade battery cells cost $136 per kilowatt-hour (kWh), at the same level as that of Panasonic’s lithium-ion cells with nickel-cobalt-aluminum (NCA) cathode chemistry and lower than the $142 kWh of the cobalt-based batteries sourced from LG Energy Solution, according to Gong.
  • However, CATL’s LFP battery cells for Tesla’s Model 3 are currently more competitive cost-wise than its rivals’ offerings at $131 per kWh, Gong added, as per the recent teardown results of CATL and BYD battery packs presented by UBS.
  • Tesla has been sourcing nickel-manganese-cobalt (NMC) batteries from CATL for its China-made vehicles to date, while Panasonic and LG Energy Solution are major battery suppliers to Tesla globally.
  • BYD sold the equivalent of 7.9 gigawatt-hours (GWh) of batteries in the first half of this year, surging 206% year-on-year and taking an 11.8% share of the global EV battery market, according to figures compiled by the South Korean industry tracker SNE Research. CATL is the dominant player with a 34.8% market share, followed by LG’s 14.4%.

Jill Shen

Jill Shen is Shanghai-based technology reporter. She covers Chinese mobility, autonomous vehicles, and electric cars. Connect with her via e-mail: jill.shen@technode.com or Twitter: @yushan_shen