Tesla Inc. (TSLA) is asking the Chinese government for approval to build model 3 vehicles in the country equipped with lithium iron phosphate (LFP) batteries, Reuters reported.
The name of the battery maker wasn’t disclosed, according to a document by the Ministry of Industry and Information Technology seen by Reuters.
Reuters exclusively reported in February that Tesla is in advanced talks to use LFP batteries from CATL that contain no cobalt – one of the most expensive metals in electric vehicle (EV) batteries – in cars made at its China plant.
Tesla did not immediately respond to a request for comment from Reuters.
Model 3 vehicles are being built at the U.S. car maker’s Shanghai factory. On May 8 Tesla revealed that it secured a 4 billion yuan ($565M) lending line for continued expansion of production at the Gigafactory Shanghai.
The company uses EV batteries from Panasonic Corp and LG Chem. CATL has said it would start supplying Tesla from July.
Earlier this month figures from the China Passenger Car Association (CPCA) showed that sales of Tesla’s Model 3 sedan in China plunged 64% in April vs March. The industry association also said that auto demand was now recovering following the coronavirus outbreak.
The value of Tesla shares has more than doubled in the past two months. The stock depreciated 1.3% to $816.88 as of the close on Friday.
TipRanks data shows that Wall Street analysts take a more cautious stance on Tesla stock. The Hold consensus rating is based on 9 Sells, 9 Holds, and 8 Buys. Following the stock’s recent rally, the Street’s $623.45 average price target implies 24% downside potential in the shares over the coming year. (See Tesla’s stock analysis on TipRanks).