An Unexpected Duo: Tesla and CATL
The intriguing collaboration between Tesla Inc and CATL, a Chinese battery maker, has caught the attention of Morgan Stanley Analyst Adam Jonas, who sees the pair as a possible catalyst for revitalizing the U.S. electric vehicle (EV) market.
Reviving the EV Market
According to Jonas, the U.S. EV market is in urgent need of high-quality yet affordable batteries, a gap that could potentially be filled through cooperation with China despite complex geopolitical dynamics and security concerns. While the U.S. market remains relatively underdeveloped, China boasts a surplus of batteries due to high market penetration.
Powering Up Innovation
Recent reports indicate that CATL and Tesla are collaborating on a rapid-charging battery project in Nevada, although neither company has officially confirmed this development. Tesla’s pursuit of a more budget-friendly EV, expected to be priced at approximately $25,000, necessitates Chinese collaboration to achieve this price point. While CATL currently cannot directly sell its batteries in the U.S., it has the option to license its technology for a royalty fee.
Balancing Western and Eastern Influence
Expressing the importance of bridging the gap between U.S. and Chinese EV technologies, Jonas highlights the need for integrating Chinese innovations into the American market. However, this fusion process may require some “westernization” of Chinese technology to align with the protectionist sentiments prevailing in the U.S. and Europe.
Financial Insight
Jonas, who maintains a price target of $320 for Tesla and an ‘overweight’ rating, foresees positive outcomes from the partnership. Despite closing up 2.92% at $177.67 on Tuesday, Tesla’s stock has experienced a 28.5% decline year-to-date, indicating potential for growth following strategic collaborations.