Honda has signed an agreement with Tesla battery supplier CATL to form a strategic alliance on next-generation batteries that will be used on its electric vehicles.

Contemporary Amperex Technology Co., Limited which has been supplying batteries for Tesla’s China-made Model 3 (together with Korea’s LG Chem and Samsung SDI Co.) will conduct joint development on EV batteries and other fundamental technologies for future applications.

CATL will provide stable supply of NEV batteries to Honda, mainly for battery electric vehicles (BEVs). The first model equipped with a CATL battery is scheduled to be launched in the Chinese market in 2022. This alliance will be further expanded to the global level in the future. Moreover, battery recycling and reuse also will be a topic in further discussions between CATL and Honda.

With this agreement, Honda has acquired approximately 1 percent of CATL shares through the non-public issuance of stocks, which makes Honda a leading strategic partner of CATL. This will enable Honda to secure a stable supply of batteries with excellent product and cost competitiveness. Through the non-public issuance of stocks, CATL will strengthen its battery development and further expand production capacity, etc. Based on this alliance, the two companies will strengthen initiatives to further popularize electrified vehicles and establish a long-term relationship.

CATL is also responsible for Apple’s MacBook Air batteries and has helped BMW’s China joint-venture to develop battery-electric vehicles there.