Investor's Corner
Tesla’s CATL partnership in China is a strategic play that sets the stage for market domination
Tesla’s deal with battery supplier Contemporary Amperex Technology Co Ltd (CATL) for its Made-in-China Model 3 is a strategic move that will deepen the company’s roots in the world’s largest automotive market.
CATL is expected to supply a “zero cobalt” prismatic lithium iron phosphate (LFP) batteries that the carmaker would use in its Model 3 sedan for the domestic market.
Reduce Battery Costs While Doing Good
The LFP batteries are expected to be cheaper by a “double-digit percent” compared to the existing batteries Tesla is using for its locally-produced Model 3. Benchmark Mineral Intelligence, a price reporting agency that specializes in lithium-ion batteries for EVs, estimates that Tesla will save more than 25% in cost compared to what the carmaker spends for batteries used for Model 3s in the United States.
Tesla uses cylindrical nickel-cobalt-aluminum (NCA) batteries for its vehicles which typically have lower cobalt content than industry-popular nickel-cobalt-aluminum (NCM) batteries used by other electric vehicle manufacturers. However, as the world begins to better understand the human toll for cobalt mining, Tesla CEO Elon Musk has expressed his intentions to cut cobalt-use in Tesla batteries. Thereby paving the way for a partnership with a battery cell manufacturer that has a zero to limited-need for cobalt – CATL.
We use less than 3% cobalt in our batteries & will use none in next gen
— Elon Musk (@elonmusk) June 13, 2018
CATL will use its cell-to-pack (CTP) technology to improve the energy density and safety of the zero-cobalt batteries. Using the technology that involves more than 70 core patents, CATL can up the mass-energy density of the LFP batteries by 10 to 15 percent, reduce the number of parts of battery packs by around 40 percent, and improve volume utilization efficiency by 15 to 20 percent. The battery manufacturer also claims that it is taking steps to increase the energy density of its LPF batteries using CTP technology by 2024.
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All of these factors make the equation a win-win for Tesla. Aside from the cost savings, the zero-cobalt batteries for the China Model 3 may also help improve the production process and help Giga Shanghai hit a 3,000 units per week run rate, consistently. Plus, Tesla’s partnership with a Chinese supplier can only help further improve its relationship with the government that has welcomed it with open arms.
Small Step To Reduce Cost, Big Step To Conquer China
Tesla’s Giga Shanghai has so far been impressive. The first vehicle production plant for Tesla outside of the US is practically a miracle by all standards. The facility was built from the ground up and it churned out its first locally-made Model 3s after 10 months.
It also makes sense to set up a car factory in the biggest automotive market in the world that brought roughly $3 billion in revenues to Tesla’s coffers in 2019 and positioned Tesla to conquer China.
“I feel there is a pretty big fundamental efficiency gain that Tesla has by just making cars, especially affordable cars than 3 and Y, at least on the continent where the customers are. what we’re doing — or have been doing in the past was really pretty silly in making cars in California and then shipping them halfway around the world…,” Musk said during the Q4 2019 earnings call.
With the CATL zero-cobalt batteries for MIC Model 3s, Tesla further localizes its supply chain in China. With localization, analysts believe that the China-made Model 3 can practically be a cash cow for Tesla.
A partnership with CATL can also put Tesla on a path to achieving higher profit margins for the China Model 3 while still being able to lower the price of its vehicles, thereby stimulating local demand even more.
According to Tesla CFO Zachary Kirkhorn, the margins coming out of Giga Shanghai is expected to match that of vehicles coming out of Fremont. “And so if you add all of this up, our internal estimates are a pretty significant reduction in the cost of Model 3 in China relative to Fremont, but I think it’s also important to keep in mind that the cost of the Standard Plus that we’re selling out of Shanghai is also lower than that of the similar car coming out of Fremont from price perspective. And so and I’ve said this on previous earnings calls, I think it’s fair to expect the margin coming out of the Shanghai facility to match the same margin for the vehicle in Fremont,” noted Kirkhorn in Tesla’s Q4 earnings call.
With Tesla’s MIC Model 3 as an electric car for the masses, Elon Musk and his car brand can help change China. The government sees Tesla as a catalyst for its slumping automotive industry and a spark to help transition the wider population from internal combustion engines to electric vehicles, which in turn can help combat air pollution that causes over 1 million deaths per year in the country and costing its economy roughly $40 billion annually.
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The zero-cobalt batteries by the CATL for the China Tesla Model 3 might be one of the essential ingredients to further help TSLA skyrocket and drive the brand to consistent profitability.
Elon Musk
Tesla AI boss reveals how big Optimus is going to get
Tesla’s Optimus chief corrected himself on X, confirming a staggering 10 million robot production target.
![Tesla Optimus Gen 3 [Credit: Tesla]](https://www.teslarati.com/wp-content/uploads/2026/03/tesla-optimus-gen3-diner.jpg)
Tesla’s Optimus program has a new number attached to it, after Ashok Elluswamy, the executive who has run the humanoid robot program since June 2025, posted a three word correction on X Thursday, “Correction, 10 million robots.”
The line clarifies the long term annual capacity Tesla is building toward its planned second Optimus production line at Gigafactory Texas, a figure Musk has cited repeatedly since last year’s shareholder meeting.
The scale is worth noting, because ten million robots a year would mean Tesla building more units annually than most countries sell in new cars. Tesla has framed this as a second line, not the first. The buildout is happening in two phases: a roughly one million unit per year line inside Tesla’s Fremont factory, installed on the floor space vacated when Model S and Model X production ended earlier this year, and a much larger dedicated facility under construction at Giga Texas that broke ground on its first steel structure in May. That Texas facility is the one Elluswamy’s correction refers to, and is expected to reach volume production sometime in 2027.
Correction, 10 million robots https://t.co/0z4nyQNTzp
— Ashok Elluswamy (@aelluswamy) July 30, 2026
Tesla Optimus project fires up as Musk sees production line progress
Elluswamy took over Optimus from Milan Kovac last summer and has spent the months since talking up the program’s trajectory. Elon Musk has also floated the ten million figure at Tesla’s 2025 shareholder meeting.
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Ending Model S and Model X production to make room for the first Optimus line was one of the more consequential manufacturing decisions in the company’s recent history, retiring two flagship vehicles in favor of a robot that has yet to enter mass production. Musk has previously estimated per unit production costs at $20,000 to $25,000 once Tesla reaches a million units a year, though he hasn’t said what that cost looks like at ten times the volume.
SpaceX just picked up another $1.6 billion from the Pentagon, with the U.S. Space Force awarding two task orders worth $1.6 billion to fly 18 Falcon 9 missions from Vandenberg Space Force Base in California through the end of 2027. The launches will carry satellites for the Space Based Sensing and Targeting portfolio, a set of programs meant to help the military detect and track airborne threats and relay that information across forces in near real time.
The award falls under National Security Space Launch Phase 3 Lane 1, the Space Force’s faster, commercial style procurement track for missions that do not require the military’s most demanding certification process. It is also the largest single order publicly disclosed under that program so far, and the first task order issued since the Space Force nearly tripled Lane 1’s contract ceiling from $5.6 billion to $17 billion on July 17.
SpaceX to become America’s Military data backbone for missiles, drones, and warfighters
Eric Zarybnisky, the Space Force’s acting portfolio acquisition executive for space access, said the entire process, from identifying the requirement to signing the contract, took about two months, including a month set aside for companies to prepare proposals.
SpaceX is not just launching these satellites. It already holds the contracts to build two of the programs within the same portfolio, $4.16 billion for the Space Based Airborne Moving Target Indicator system and $2.29 billion for the Space Data Network Backbone, which Teslarati covered in May. That means SpaceX is now responsible for both building key pieces of the military’s next generation sensing network and getting them into orbit.
With this latest award, SpaceX’s Pentagon contract total for 2026 alone tops $8 billion, adding to a defense portfolio that already includes the Golden Dome missile defense software group SpaceX joined in April and a string of GPS launches it inherited after ULA’s Vulcan rocket ran into a booster anomaly, which we detailed in March.
Lane 1’s vendor pool technically includes seven companies: SpaceX, ULA, Blue Origin, Rocket Lab, Stoke Space, Impulse Space, and Relativity Space. In practice, SpaceX remains the only provider with the combination of launch cadence, flight proven Falcon 9 hardware, and West Coast infrastructure to support a campaign requiring roughly one Vandenberg launch a month for the next year and a half.
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Some lawmakers have flagged the growing concentration of national security launches with one company as a risk worth watching. For now, the Space Force keeps backing SpaceX, with it being the company that shows up ready to launch.
SpaceX (NASDAQ: SPCX) got an absolutely crazy price target rating from Raymond James after the company experienced a tough first few weeks following its Initial Public Offering (IPO).
Despite the tumultuous start, SpaceX has plenty of believers, and the company’s massively successful Starship launch last Friday, its 13th test flight of the massive rocket, went so smoothly that Raymond James analysts pushed its price target on the company to roughly 7 times its current trading level.
SpaceX Starship just nailed something it’s never done before
The firm officially put a “Strong Buy” rating and an $800 price target on the stock. It currently trades at around $113. Its all-time high is $225.64, reaching this trading level shortly after shares first went public.
Raymond James’ price target is tied to the firm’s confidence after Starship’s 13th test flight. Analysts at the firm said it was an incremental step that reduces engineering risks, citing the widely successful heat shield test that CEO Elon Musk recently detailed, the smooth deployment of Starlink V3 satellites, and a successful in-space engine relight.
SpaceX also managed to see Starship splash down safely in the Indian Ocean, while the Super Heavy Booster fell down to the Gulf of America with no incidents.
It is interesting to see these launches have such a tremendous impact on the stock and what investors think of it. After SpaceX initially delayed the Starship launch last week, shares fell tremendously. Most probably did not realize that the stand-down is a standard practice, especially if everything is not perfect.
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The mission was initially aborted due to an issue with Raptor engines. This was resolved, and Starship launched last Friday after another delay on Thursday, which was caused by weather.
Now that analysts have seen what SpaceX launches are capable of and how impressive the feat is, firms are adjusting their price targets accordingly, making it known that they have high expectations for the space exploration company.
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Tesla CEO Elon Musk denies ridiculous Gigafactory Shanghai rumor
![Tesla Optimus Gen 3 [Credit: Tesla]](https://www.teslarati.com/wp-content/uploads/2026/03/tesla-optimus-gen3-diner-80x80.jpg)
