AutoBeta(AutoBeta.net)02/03 Report--

Ningde Times, a power battery supplier, issued a notice on the morning of February 3, confirming that it had signed an agreement with Tesla to supply Tesla with lithium-ion power battery products, which began in July.

Ningde Times said that the company recently made a statement of business cooperation because it was concerned that Tesla CEO Elon Musk mentioned in the earnings call for the fourth quarter of 2019 held on January 30, 2020 that "LG and Ningde era will become its new partners."

The description shows that the company intends to sign "Production Pricing Agreement (China)" with Tesla and Tesla (Shanghai) Co., Ltd., in which it is agreed that Ningde Times will supply Tesla with lithium-ion power battery products. The company and Tesla agreed on the product supply mode and product standards during the business cooperation. Tesla will determine the specific purchase situation by order according to his own needs, and the agreement does not impose mandatory restrictions on Tesla's purchase volume. The final sales amount shall be subject to the actual settlement of the purchase order issued by Tesla.

Supply starts in July this year, and the agreement is valid from July 1, 2020 to June 30, 2022.

The number of battery suppliers for Tesla has increased to three. In 2009, Japan's Panasonic began to supply batteries to Tesla, becoming Tesla's long-term exclusive battery supplier. With the commissioning of the Shanghai plant, Tesla's domestic models have to use domestic batteries to reduce costs and achieve 100% localization, while Panasonic does not plan to build a factory in China.

As early as March 2019, Bloomberg reported that Tesla was in talks with Ningde Times on the supply of battery orders, and Ningde Times clarified that it had not reached any intention to cooperate with Tesla and had not signed any commercial agreement. It is reported that Tesla CEO Musk traveled to Shanghai in August to meet with Ningde Times executives for about 40 minutes, after which the two companies reached a non-binding agreement. In November, it was also reported that Tesla had reached a preliminary non-binding agreement with Ningde Times to supply batteries to Tesla's Shanghai plant as early as 2020. Until now, the news was finally confirmed by both sides.

For Ningde Times, the signing of the agreement marks the recognition of the product quality and production capacity of the company's power batteries, which further verifies the company's competitiveness in the field of power batteries and has a positive impact on the company's operating performance in related years. Ningde Times expects to make a net profit of 4.064 billion yuan to 4.911 billion yuan in 2019, an increase of 20% over the same period last year.

For Tesla, the purchase of domestic batteries can further reduce costs. It has been revealed that the current localization rate of parts at Tesla's Shanghai factory is about 30 per cent, which is planned to rise to 70 per cent by July 2020 and 100 per cent by the end of the year. This also means that the domestic Model 3 must use the power battery provided by the local supplier in the follow-up production, and there is room for price reduction while the cost is effectively controlled.

The delivery of the domestic Model 3 is less than a month. The standard upgrade version (made in China) costs 299050 yuan, with a range of 445km / h, a top speed of 225km / h, a 100km acceleration time of 5.6s and a basic driving assist function.

In the past 2019, Ningde era accounted for half of domestic power battery shipments, loading 31.46GWh, market share reached 50.58%. So far, the partners in Ningde era include independent car companies such as SAIC, Dongfeng, Changan, BAIC, Geely and Guangzhou Automobile, as well as multinational car companies such as Daimler, BMW, Volkswagen, Toyota, Volvo and Tesla.

At present, details of the cooperation between Ningde Times and Tesla have not yet been released, and Tesla said it will be further revealed in the "Battery Day" in April. It is worth noting that LG Chemistry will also be a supplier of batteries for Tesla's domestic models.

With the installation of domestic batteries, the biggest concern for consumers is whether the domestic Model 3 will further reduce the price, perhaps the price of 250000 yuan is also possible. After Tesla completes the 100% local supply chain, it will pose a great threat to the domestic new energy car-building power.

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