Tesla holds battery supply talks Tianjin Lishen

U.S. automaker Tesla Inc has held conversations with China’s Tianjin Lishen to supply batteries for its new Shanghai factory, and two people with direct understanding of the matter stated the companies signed a preliminary agreement.

The companies have yet to decide how large an order Tesla would place, and Lishen is still working out what battery cell size the automaker would require, one of the people stated.

Details of the agreement were not clear. In Chinese, a preliminary agreement could refer to mere acknowledgment through to a statement of intent.

The talks come as Tesla searches to localize battery cell production in the face of increasing competition from a swathe of domestic EV makers in the largest car market, where a Sino-U.S. trade war is boosting the cost of U.S. imports.

Tesla stated it received quotes from Tianjin Lishen to provide batteries for the Shanghai plant but did not proceed further.

“We have not signed any agreement of any kind with them,” a Tesla spokeswoman informed Reuters.

Lishen informed Reuters that it had not signed any agreement with the automaker to provide batteries to the factory.