Chinese power battery giant and the Shanghai government signed a strategic cooperation framework agreement on August 18 to build a manufacturing base in the city that is expected to make it more convenient for 's battery supply.

As a supplier to Tesla and , CATL will build a project in Shanghai that includes a global innovation center, an international functional headquarters, a future energy research institute, and a high-end manufacturing base, according to a company announcement.

The two sides will deepen cooperation in areas such as cutting-edge new energy technology research and innovative applications, urban transportation electrification transformation, and new energy high-end talent cultivation, the announcement said.

CATL established the Future Energy Research Institute Inc in Shanghai on August 18 with a registered capital of RMB 200 million ($30.84 million), according to information from data provider Qichacha.

The company's business scope includes scientific research, technical services, technology development, technical consultation, technical exchange, technology transfer, technology promotion in the field of new energy technology and new materials, as well as research and development of emerging energy technologies and software development.

Of note is that the joint signing of the production base investment agreement with CATL is the Lingang Group, which manages an area that is home to Tesla Gigafactory in China.

In February 2020, CATL signed an agreement with Tesla to supply lithium-ion power battery products between July 2020 and June 2022.

To further extend and deepen the friendly relationship between the two companies, CATL and Tesla signed a new agreement on June 25, 2021, building on the above agreement, the company said in an announcement at the end of June.

CATL's settlement in Shanghai will also logistically benefit Tesla's battery supply chain. Tesla is lowering the price of Chinese-made electric vehicles through a high rate of localization.

On August 18, CATL and Sichuan Development Holding Co signed a strategic cooperation agreement in Chengdu to cooperate in the areas of energy storage, charging and switching facilities, aerospace power research and development, upstream materials integration, intelligent mining and extraction, parts supply, and commercial vehicle electrification.

CATL, the world's largest battery supply giant, dominates the global production of lithium iron phosphate batteries and currently has a market capitalization of over RMB 1 trillion.

The company is planning to raise up to RMB 58.2 billion through a private placement to fund six lithium-ion battery projects, including in Fujian, Zhejiang and Guangdong, and to compete with Japan's Panasonic and South Korea's LG Chem.

CICC analysts expect CATL's battery production to increase from 200 GWh this year to more than 600 GWh by 2025, accounting for 30 percent of the global market.

(Photo source: CATL)