“We are now good friends with Tesla”, commented BYD’s executive VP, who said that the company is going to become a battery supplier for Tesla as soon as this year.

There are no perpetual enemies in the market. Although Tesla is competing against BYD in China’s EV market, the latter who possesses additional volume in battery production is about to penetrate into the former’s supply chain. After years of speculations and rumors, BYD’s executive has confirmed for the first time that the company would become a battery supplier for Tesla.

 “We are now good friends with Elon Musk because we are preparing to supply batteries to Tesla very soon,” confirmed BYD executive VP Lian Yubo for the first time during an interview. Lian made no bones in praising that Tesla is the role model for new Chinese auto manufacturers, and showed his respect towards the company.

Both parties have yet to disclose details for their partnership, though the first speculation that may come to mind is whether BYD would supply its brainchild blade battery, and the answer is probably unlikely. The blade battery is a lithium iron phosphate battery that is safer, as well as more resistant to fire and impact, through a different module structure, which has become a major selling point for BYD’s new vehicles.

What Tesla may be getting from BYD should be the basic lithium iron phosphate battery cell that can go straight to the Model 3/Y production lines at Giga Shanghai. This not only provides a more stable and diversified battery supply for Tesla, but also gives it some bargaining leverage when negotiating with CATL.

There are other explanations as to why Tesla is working with BYD. Perhaps Tesla is buying batteries from BYD for energy storage equipment that would ramp up the company’s supply of renewable energy and elevate its ratio of green power.

It may be bittersweet for Chinese car owners if Tesla adopts BYD’s batteries. Something to look forward to is the potential price slash if they are configured on EVs, while the concerning thing is that the expansion of supply in lithium iron phosphate batteries would mean that a China-made Tesla will not be configured with the new 4680 battery in the short term, and those who are looking to acquire Model Y with the new battery may have to wait until the latest batches are produced from Giga Berlin and Giga Texas.

 (Cover photo source: BYD)