Tesla has expanded its supply chain presence in China by adding Sunwoda Energy Technology Co., Ltd. as a new battery supplier, according to a report by 36Kr citing multiple industry sources. Through its EV battery unit, Sunwoda Electric Vehicle Battery Co Ltd (Sunwoda EVB), the company has become Tesla’s fifth global power battery supplier.
Battery Shipments Underway from Zhejiang Facility
The report states that battery cells are already being shipped from Sunwoda’s manufacturing plant in Yiwu, Zhejiang province. These batteries are currently being installed in vehicles produced at Tesla’s Shanghai facility and exported to overseas markets. However, there is no confirmed timeline yet for their use in vehicles sold within China.
Shift in Procurement Strategy
With the new partnership, Tesla will get battery cells directly from Sunwoda and make battery modules and packs in-house. This is a change from how it used to buy modules from CATL. This move is a new step for Tesla in the prismatic battery market and is expected to help them keep costs down.
Diversification of Battery Supply Chain
The inclusion of Sunwoda further diversifies Tesla’s global battery sourcing strategy. The company has been seeking to reduce reliance on a single Chinese supplier by adding alternatives alongside CATL. Meanwhile, BYD had previously supplied batteries to Tesla’s European operations, although no significant updates have been reported recently.
Cost Pressures and Margin Decline
Buying batteries still costs more than 30% of the total cost of a vehicle. Tesla’s car sales fell by 10% from the previous year to $69.526 billion in 2025. Without regulatory credits, its automotive gross margin fell to 15.4%, which is a lot lower than its 2021 peak. This led to efforts to make the supply chain more efficient.
Advanced LFP Technology and Competitive Pricing
Sunwoda’s batteries use third-generation lithium iron phosphate (LFP) technology and can charge at rates of up to 3C. Sunwoda has gained popularity because it offers competitive prices and services. It also worked with Li Auto to form a joint venture in the past.
Financials and Legal Settlement Update
Last July, Sunwoda EVB applied to be listed on the Hong Kong Stock Exchange. It said it would make 56 billion yuan ($8.2 billion) in 2024. The company has also settled a lawsuit with a Geely subsidiary over battery quality claims worth up to 2.31 billion yuan. The settlement is likely to lower its net profit for 2025 by 500 million to 800 million yuan.
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