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Tesla Partners With CATL to Develop New Million-Mile Battery

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Tesla Inc (TSLA - Free Report) plans to roll out the new million-mile battery in collaboration with Contemporary Amperex Technology Ltd (CATL) at the earliest this year or in 2021 for its Model 3 in China. The battery prices are expected to be $100/kWh, the level at which electric vehicles (EVs) reach rough parity with internal combustion competitors.

These batteries will rely on technologies such as low-cobalt and cobalt-free battery chemistries, and the use of chemical additives, materials and coatings. This will minimize internal stress and help the batteries to store more energy for longer period of time.

Reportedly, improved versions of the battery, with higher energy density and storage capacity and even lower prices, will be introduced in additional Tesla vehicles in other markets, including North America, in the upcoming days.

CATL has also developed a simpler and cheaper way to package battery cells called cell-to-pack, which removes the bundling cells in the middle stage. This technology is expected to help Tesla reduce battery weight and costs. In addition, CATL plans to supply Tesla with an improved long-life nickel-manganese-cobalt (NMC) battery in China next year, the cathode of which is 50% nickel and just 20% cobalt.

Meanwhile, with China being the biggest EV market, Tesla’s plans to start production in the country bode well. Robust production levels from the new Gigafactory in Shanghai bode well for its growth. The Shanghai factory is ramping up well and commands a higher market share in the China EV market. The plant is operating at full capacity, and will continue to generating solid revenues for the firm. Accelerated production from Gigafactory 4 in Berlin will also add to the top line, marching ahead. Tesla’s focus on expansion of product portfolio and development of self-driving capability is commendable.

Further, Tesla aims to implement new high-speed, fully-automated manufacturing processes designed for batteries to reduce labor costs and increase production in massive terafactories.

Zacks Rank & Key Picks

Currently, Tesla carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same sector are Veoneer, Inc. , Unique Fabricating, Inc. and Modine Manufacturing Company (MOD - Free Report) , each carrying a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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