Tesla Signs Battery Material Deals in China. The Stock Is Rising.

Tesla’s deals come after General Motors announced agreements to buy materials for batteries last week.


Justin Sullivan/Getty Images

Auto makers want to produce a lot more electric vehicles. That will take a lot more batteries, so car companies, including Tesla, are lining up all the materials they will need.

Sunday, two Chinese battery-material suppliers disclosed deals with



Tesla

(ticker: TSLA), according to multiple reports citing overseas regulatory filings. Tesla, the leader in the electric-vehicle business, didn’t immediately respond to a request for comment.



Zhejiang Huayou Cobalt

(603799. China), a processor of cobalt and other metals, is one of the companies. EV batteries based on cobalt generally have higher costs and better range than other alternatives, so car companies generally use cobalt in their higher-cost, highest-range vehicles.

The deal with Tesla runs from 2022 through 2025. Zhejiang shares gained about 9.1% in overseas trading.



CNGR Advanced Material

(300919. China) is the other company. It supplies lithium cathode material to battery makers, taking lithium from miners and processing it further. Its agreement with Tesla runs from 2023 to 2025. The stock gained 7.2% in overseas trading.

Tesla stock might be getting a small bump from the news. Shares were up 1.4% in premarket trading, while futures on the


S&P 500

and


Dow Jones Industrial Average

futures were both down a little.

Tesla shares might also be getting a boost from news about EV deliveries by



NIO

(



NIO

),



XPeng

(XPEV) and



Li Auto

(LI). The three Chinese companies delivered 31,998 vehicles in July, down from 41,280 in June, but investors expected a dip because the June number included volume delayed from April and May as a result of China’s lockdowns to fight Covid-19.

NIO, Li and



XPeng

shares were up between 2.5% and 3% in premarket trading.

The deal with Tesla comes shortly after



General Motors

(GM) announced two battery-material supply deals with battery maker



LG Chem

(051910. Korea) and lithium miner



Livent

(LTHM) this past week.

Earlier in July,



Ford Motor

(F) announced a deal with Chinese battery maker



Contemporary Amperex Technology Co. Ltd.

(300750. China) for lithium iron phosphate battery cells.



Lithium

iron phosphate is a battery chemistry that is less expensive than batteries that include cobalt.

Write to Al Root at allen.root@dowjones.com

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