Exclusive Tesla supplier Catl plans a major battery plant in Shanghai

China’s CATL is planning a major new automotive battery plant in Shanghai. Continuing a blistering pace of expansion that will cement its lead as the world’s No.1 supplier.

The factory in Shanghai will put it close to Tesla Inc’s Chinese production base after it began supplying batteries for the U.S. automaker’s Model 3 cars in China last year. CATL aims to become its biggest supplier in the near future by providing half of the battery cells Tesla uses globally. In electric vehicles and roof energy storage this can be seen said a senior source at the Chinese company.

The new plant can make 80 gigawatt-hours of battery cells a year. This would come on top of 69.1GWh in current production capacity and another 77.5GWh under construction. CATL has been in talks with the Shanghai government about building the factory. The location of the factory also adds perks to the features. CATL said that it is in talks with Tesla about more collaboration. And also, Tesla is seeking help from the company on battery solutions, but declined to comment on any plans for additional production capacity.

The expansion plan is likely to add to competitive pressure on Tesla’s other battery suppliers. Japan’s Panasonic Corp and South Korea’s LG Energy Solution, a unit of LG Chem. Many battery makers are ramping up their production. So that they can meet the soaring worldwide demand, because car makers accelerate their shift to electric vehicles. And this is to comply with tougher emission rules which is aimed at tackling global warming.

The plant is likely to be located south of Tesla’s Shanghai factory in Lingang, Pudong New Area. It will hire 5,000 workers and manufacture cell-to-chassis (CTC) batteries. The new technology integrates cells directly onto an EV’s frame. And this is to increase the energy density of battery systems. CATL Chairman Zeng Yuqun has said electric vehicles could attain driving ranges of over 800 km (500 miles) with CTC technology and added that CATL aims to launch the technology before 2030.

A research center is also being planned by CATL and a global sales and operational center in Shanghai. Shenzhen-listed CATL closed down 2.3%, valuing the battery maker at some $155 billion. The broader ChiNext Composite index fell 1.3%. Its shares have risen some 18% this year as sales soar.