China-based battery giant CATL, a top supplier to Tesla, on Wednesday launched a new low-cost, fast charging, lithium iron phosphate (LFP) battery it says can power a vehicle for 248 miles after 10-minutes of charging. Tesla stock edged lower Wednesday.
CATL announced Wednesday that the Shenxing Battery will be mass-produced by the end of 2023 and available in the first quarter of 2024. The world's largest battery maker claims it will give vehicles up to 700 kilometers (435 miles) of range fully charged.
CATL also claims the new LFP battery can get 400 kilometers of range (248 miles) after 10 minutes of charging. That's enough to get from New York City to Boston after just a 10-minute top-up.
It's unclear how much more expensive the Shenxing Battery will be, a key consideration for Tesla and other automakers deciding whether to adopt it.
TSLA fell 3% to 225.60 in Wednesday's market trade. Also on Wednesday, Tesla hiked Model S and X discounts in China, the latest in a wave of price cuts this week. So far in August, Tesla stock is down more than 14%. Shares hit a 2023 peak of 299. 29 on July 19, just before earnings.
CATL Batteries And Tesla
Tesla uses CATL LFP batteries in China as well as in its U.S. base Model 3. The global EV company traditionally has not mass produced its own batteries and instead purchases the cheaper LFP batteries from CATL. The China-battery giant competes with the Warren Buffett-backed EV and battery giant BYD.
For lithium-ion batteries, TSLA's joint venture partner Panasonic makes the cells and Tesla packages them. Tesla also buys lithium-ion batteries from South Korea's LG. Meanwhile, Tesla is working on 4680 batteries, first touted in late 2020. Tesla's 4680 pilot program has picked up output in recent months. However, it's unclear if Tesla has solved key technical hurdles to allow for mass production and cost savings for the 4680 battery.
Tesla is reportedly mulling a new U.S. battery plant with the help of China's CATL, which provides the bulk of its batteries in China. CATL recently reached a similar deal with Ford. Tesla plans to open a new facility in Shanghai to make Megapack large-scale battery storage units, presumably using CATL batteries.
Meanwhile, BYD is one of the world's largest EV battery makers. Its Blade batteries are a specialized LFP. BYD is ramping up battery plants to supply third-party EV makers as well as storage, above and beyond its own EV needs. Tesla has even started using BYD battery cells in some Berlin-made Model Y crossovers.
Futures Rise On China Stimulus Hopes, But Yields Keep Climbing
Tesla Stock
TSLA has been pulling back since second-quarter financials on July 19, as investor concerns over falling gross margins outweighs the global EV giant's above-forecast earnings and revenue.
Tesla stock declined 4.4% to 242.65 last week. That move undercut support at the stock's 50-day, 10-week moving average, finishing Friday 6.7% below that technical level of support. Finishing the week more than 2% below the 10-week is a significant sell signal, according to IBD analysis.
Tesla has continued downward this week.
TSLA stock ranks fourth in IBD's automaker industry group. It has a 95 Composite Rating out of 99. Tesla has an 88 Relative Strength Rating and its EPS Rating is 94 out of 99.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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