Tesla, Nio Supplier CATL To Invest $2.1B In New Lithium Battery Project

China’s Contemporary Amperex Technology Co. Ltd. or CATL, a battery supplier to Tesla Inc. (NASDAQ: TSLA) and Nio Inc. (NYSE: NIO), will build a lithium battery production site in eastern China for an investment of up to RMB 13.5 billion ($2.1 billion), cnEVpost reported Monday.

What Happened: CATL will utilize its own funds for investment in the project, which is expected to be completed by 30 months, as per the report. The lithium battery production site is located in Yichun, China’s Jiangxi province.

CATL, the world’s biggest EV battery maker, had reportedly signed strategic cooperation framework agreements with the Jiangxi Provincial Government and Yichun Municipal Government in July to build a new lithium battery production site.

See Also: Nio Rivals Xpeng, Li Auto Fall In Hong Kong After Minister's Comments, Alibaba Continues To Dip While Other Big Tech Firms Strike Gains

Why It Matters: CATL has been expanding battery manufacturing capacity across China and in Germany amid the rising demand for electric vehicles around the world.

It was reported in June that Tesla has signed a new long-term battery cell agreement with CATL to secure supplies between January 2022 and December 2025.

CATL is also exploring the acquisition of a minority stake in Hong Kong-listed Chinese miner Jinchuan Group International Resources Co. as part of its efforts to secure supplies of key battery materials, according to a Bloomberg report in August. The battery is the key component of an electric vehicle as it accounts for roughly 30% of the cost.

Price Action: Tesla shares closed 0.9% higher in Monday’s trading at $743.00, while Nio’s shares closed almost 1.1% higher at $38.39.

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