Tesla is negotiating battery supply with Yiwei Lithium Energy or finalizing cooperation in the third quarter.

According to foreign media reports, four people familiar with the matter said that US electric carmaker Tesla is in talks with Chinese battery maker Yiwei LiNeng (EVE Energy Co), and Tesla may include Yiwei LiNeng in the supply chain of its Shanghai plant to seek to increase the purchase of low-cost batteries.

Yiwei Lithium can produce Lithium Iron Phosphate Battery (LFP), this battery is cheaper to produce because it uses iron rather than the more expensive nickel and cobalt. However, lithium iron phosphate batteries usually have a shorter mileage on a single charge than the more popular nickel / cobalt batteries.

The two companies are now in in-depth negotiations and Tesla is seeking to finalize the partnership in the third quarter, two people familiar with the matter said. Yiwei LiNeng, which is listed in Shenzhen, is currently conducting the final stage of testing the batteries it supplies to Tesla, according to one of the people familiar with the matter.

If the agreement is reached, Yiwei LiNeng will become Tesla's second lithium iron phosphate battery supplier after Ningde era.