Tesla Inc TSLA is in advanced talks with China’s EVE Energy Co to add the battery maker to its supply chain at the Shanghai gigafactory, Reuters reported on Friday.
What Happened: The Elon Musk-led EV maker is looking to boost its supply of low-cost batteries and is relying on EVE Energy, which makes the more affordable lithium iron phosphate (LFP) batteries, to be its second supplier in China after CATL, the report said.
Lithium iron phosphate (LFP) batteries are about 20% cheaper to make as they use iron instead of more expensive nickel and cobalt, according to a Bloomberg report.
Though LFP battery packs haven’t proved as powerful as the more expensive alternatives, the technology is gaining in popularity.
Tesla aims to finalize the partnership in the third quarter after the Shenzhen-listed EVE wraps up some final-stages tests for the California-based EV maker, people familiar with the matter told Reuters.
Price Action: Shares of Tesla closed 3% lower at $571.69 on Thursday.
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