- Tesla began to sign contracts with junior mining companies to build new mining projects that would increase the supply of some critical resources for batteries.
- Tesla wants to diversify its supply chain risks further and reduce its overreliance on EV battery suppliers.
- The overall fundamentals of CATL are still strong, with a diverse client base and similar deals like the battery supply deal with Tesla to December 2025 in the pipeline.
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2 months ago, we at ChineseAlpha analysed CATL (SZSE:300750) to determine whether it makes an attractive investment. Back then, we concluded that CATL is a BUY, mainly because:
- Electric batteries become increasingly price competitive to internal combustion engines as economies of scale, scope, and learning play out; CATL is prepared to scale and lead the Chinese charge.
- CATL is strengthening its market position by becoming a supplier of lithium iron phosphate batteries for TESLA, challenging Panasonic’s supremacy in the market leader’s supply chain.
- The battle to be the dominant EV manufacturer is worth hundreds of billions of US dollars and CATL is spreading its eggs by entering new strategic partnerships.
However, since then, several significant events have taken place – which is why we want to give an update on our opinion on CATL as an investment in November 2021.
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