Tesla supplier CATL plans a new battery plant in Shanghai

China’s CATL, in a bid to cement its lead as the world’s number one supplier, is planning a major new automotive battery plant in Shanghai, two people familiar with the matter said.

The plant would be able to make 80 gigawatt-hours of battery cells a year, one of the people said, which would come on top of 69.1GWh in current production capacity and another 77.5GWh under construction.

Locating the plant in Shanghai will put it close to Tesla Inc’s Chinese production base after it began supplying the U.S. automaker last year.

It will also enable CATL to draw upon a larger and more diversified talent pool than its headquarters in Ningde in southeastern China, they said.

The expansion plan is likely to add to competitive pressure on Tesla’s other battery suppliers, Panasonic Corp and LG Chem’s LG Energy Solution unit.

CATL has been in talks with the Shanghai government about building the factory, the people said. It was not immediately clear when a final agreement might be reached or when CATL hopes to have the new plant up and running.

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