Tesla agrees to battery supply deal with EVE Energy in Malaysia
Tesla has signed a long-term agreement with Chinese battery maker EVE Energy to supply lithium iron phosphate (LFP) battery cells. The deal involves EVE building a new factory in Malaysia to support Tesla's electric vehicle production. This move aims to diversify Tesla's battery supply chain amid global expansion efforts.
On September 12, 2024, Tesla announced a strategic partnership with EVE Energy, a leading Chinese battery manufacturer, to secure a steady supply of LFP battery cells. Under the agreement, EVE Energy will construct a dedicated factory in the Mutiara PPR industrial park in Johor Bahru, Malaysia. This facility is designed specifically to produce battery cells for Tesla vehicles, marking a key step in the company's efforts to bolster its supply chain outside of China.
Construction of the factory is slated to begin in the second half of 2024. Once operational, the plant will have an initial annual production capacity of 10 gigawatt-hours (GWh), with plans to expand up to 30 GWh in the future. This capacity will help meet the growing demand for Tesla's energy storage and electric vehicle needs, particularly as the company scales production in Southeast Asia and beyond.
EVE Energy, founded in 2001 and headquartered in Huizhou, China, specializes in lithium-ion batteries for various applications, including EVs. The company has been expanding its global footprint, and this Malaysian project represents a significant investment in the region. "This agreement marks a significant milestone for EVE Energy's global expansion strategy," stated Yin Jiangfan, chairman of EVE Energy, highlighting the partnership's importance.
For Tesla, the deal aligns with its broader strategy to diversify suppliers and reduce reliance on any single region, especially amid geopolitical tensions affecting battery production. Malaysia's position as a manufacturing hub in Southeast Asia, with its incentives for foreign investment and proximity to key markets, makes it an attractive location. The factory will create jobs and contribute to the local economy in Johor Bahru, a city known for its industrial growth.
This collaboration comes at a time when the global EV battery market is rapidly evolving, with LFP cells gaining popularity due to their cost-effectiveness and safety compared to other chemistries. By partnering with EVE, Tesla gains access to advanced, scalable production without immediate capital outlay for new facilities. Industry observers note that such agreements could accelerate Tesla's rollout of more affordable models, though exact timelines for integration remain undisclosed.