Tesla, (TSLA) the Austin EV powerhouse, soon will have fresh supplies of batteries for its popular vehicle lines.
BYD, (BYDDY) a China-based company that makes its own electric vehicles and is backed by billionaire investor Warren Buffett, said it shortly would be supplying Elon Musk's clean-energy carmaker with perhaps its most important component.
"We are good friends with [Tesla Chief Executive] Elon Musk and we are preparing to supply batteries to Tesla," Bloomberg News quoted BYD's executive vice president, Lian Yu-bo, as saying in a video released by China state TV broadcaster CGTN.
Bloomberg said that a deal between Tesla and BYD had been speculated about for some time. Reuters reported that BYD has been working on supply agreements with other automakers, including Toyota.
BYD says that its lithium-ion-phosphate batteries are thinner and less bulky than conventional ones and are less likely to catch fire if they are damaged, reports say.
Tesla makes its own batteries and also gets them via supply deals with companies including China's CATL, LG Energy Solutions and Panasonic (PCRFY) .
Reuters reported in April that worldwide EV demand remained strong even as prices for the cars surged.
The cost of battery cells jumped more than 50% in the first quarter. Those costs rose due to supply-chain disruptions, sanctions on Russia because of its war on Ukraine, and speculation by investors.
BYD is also trying to become a bigger player in mining lithium, Bloomberg reported.
Nickel prices, another key component in battery production, have risen 33.8% so far this year to around $27,700 per ton on the London Metals Exchange, while battery-grade lithium carbonate prices are up around 60% from early 2021 levels.
Buffett's Berkshire Hathaway (BRK.A) (BRK.B) holding company invested in BYD in 2008.
