EVE makes lithium iron phosphate (LFP) batteries, which are cheaper to produce because they use iron instead of more expensive nickel and cobalt, the news agency noted, adding LFP batteries generally offer a shorter range on a single charge than the more popular alternative.
EVE would become the second supplier of LFP batteries to Tesla after China’s Contemporary Amperex Technology (CATL).
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The talks were advanced and the Palo Alto, California-based company was seeking to finalise the partnership in the third quarter, Reuters sources said.
Shenzhen-listed EVE is running some final-stage tests of its products for Tesla, said a source.
Tesla and EVE did not reply to Reuters requests for comment.
Reuters noted Tesla CEO Elon Musk said this year the company was shifting standard range cars to an iron cathode due to concerns about the supply of nickel for scaling up battery production.
The report added Tesla raised the starting price of a standard range Model 3 sedan in China by CNY1,000 (US$155) on Saturday to CNY250,900, citing cost fluctuations.
CATL has been the sole supplier of the LFP batteries for China-made Model 3 cars with standard driving ranges since late last year, Reuters said.
Sources said Tesla had been working closely with EVE to get its batteries to meet its requirements, as it aims to bring in the supplier as, what a source called a “check and balance” against CATL.
A source said Tesla could start using EVE’s LFP batteries in the China-made Model 3 and Model Y vehicles within the next six months and EVE had ramped up production in order to be prepared for the possible partnership.
EVE, which supplies batteries to Chinese EV maker Xpeng, said in March it also has battery supply deals with BMW and Daimler, Reuters noted.
