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Tesla’s CATL partnership in China is a strategic play that sets the stage for market domination

Tesla Made-in-China Model 3 (Source: Tesla China | Twitter)

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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.

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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.

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.

The Made-in-China Model 3. (Credit: Tesla China)

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.

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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.

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.

A curious soul who keeps wondering how Elon Musk, Tesla, electric cars, and clean energy technologies will shape the future, or do we really need to escape to Mars.

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Elon Musk

Nvidia’s board meets on Jensen Huang, and Elon Musk already has an answer

Elon Musk says it would be an honor to hire Jensen Huang amid Nvidia turmoil.

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Elon Musk says he would welcome Jensen Huang at one of his companies if Nvidia’s board decides to push out its longtime chief executive.

On Wednesday evening, the financial account ZeroHedge posted “Elon please hire Jensen” on X. Musk replied roughly two hours later: “That would be an honor.” Neither Huang nor Nvidia had responded publicly as of Wednesday night.

Musk’s reply came as Nvidia’s board met to decide Huang’s future. The Wall Street Journal reported that directors were preparing to oust him following reports of two extramarital relationships. One involves Alice Huang, a Singapore-based businesswoman whom U.S. intelligence officials reportedly believe was working for China’s Ministry of State Security. The New York Times separately reported a relationship with Kimberly Powell, Nvidia’s vice president of health care. Huang acknowledged being unfaithful in a memo to employees on Sunday but gave no details.


Under Nvidia’s bylaws, a majority of its 11 directors can remove the CEO with or without cause. Bloomberg reported that the board has been working with an outside firm on possible replacements and may name an interim chief, with CFO Colette Kress seen as the likely pick. Nvidia shares fell more than 8 percent in extended trading, according to CNBC, and the company is scheduled to report quarterly earnings on November 17.

Musk has more riding on Nvidia’s leadership than most tech executives. In August, he told investors on SpaceX’s first earnings call as a public company that it would build its AI infrastructure exclusively on Nvidia hardware, calling Vera Rubin “the best architecture.” SpaceX is also working with Nvidia on the compute payload for Starmind, its planned orbital AI constellation. In October, SpaceX said it had a binding commitment for a roughly $40 billion lease of Vera Rubin GPUs and related equipment, with the leases expected to begin in the first half of 2027.

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The scale of that dependence is already enormous. On its Q3 call, SpaceX said it was bringing roughly 200,000 to 220,000 Nvidia GB300 GPUs online each month and expects 2.5 to 3 GW of nameplate compute by the end of the year. That buildout is now reaching new sites like the proposed $24 billion power plant and supercomputer campus at Starbase.

The relationship between the two executives also goes back nearly a decade. Huang has often told the story of personally delivering Nvidia’s first DGX-1 AI supercomputer to Musk in 2016, when no other customer wanted one. “Nobody wanted to be part of it, except for Elon,” Huang said on the Joe Rogan Experience last December.

Musk did not say what role Huang might fill, and his reply stops short of a formal offer. Huang co-founded Nvidia in 1993 and still owns about 3.6 percent of its stock, so any move to a Musk company would depend on whether, and how, he leaves the chipmaker he has run for more than three decades.

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Elon Musk

SpaceX’s Anthropic deal has a catch, and Elon Musk just addressed it

Elon Musk says SpaceX’s Anthropic compute deal cuts both ways after Chamath floats higher prices.

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Elon Musk pushed back on Sunday against the idea that SpaceX’s compute contract with Anthropic is a one way bet, after venture capitalist Chamath Palihapitiya argued the company could use a termination clause to charge the AI lab far more.

“It works both ways, of course. If compute becomes plentiful and cheap, SpaceX revenue will drop. No crying in the casino for either party,” Musk wrote on X Sunday evening, replying to a clip of Palihapitiya’s comments shared by AI commentator Rohan Paul.

On the All-In podcast released Sunday, Palihapitiya said either side can walk away from the agreement on 90 days’ notice. If data center supply tightens, he argued, SpaceX could exercise that option and bring the contract back at two to three times the current price, and Anthropic would have little choice but to accept. He called it “the kingmaking move,” according to BigGo Finance.

The clause itself is not new. SpaceX disclosed in its IPO filings in May that Anthropic would pay $1.25 billion per month for dedicated capacity at its Colossus clusters through May 2029, nearly $45 billion in total, with both companies able to terminate on 90 days’ notice, as Teslarati reported at the time. SpaceX’s later compute deals with Google and Reflection AI carry similar exit terms.

What has changed is the political backdrop. Palihapitiya’s thesis rests on incoming Democratic governors pulling tax incentives for data centers and slowing new construction. In Texas, Gov.-elect Gina Hinojosa campaigned on a moratorium on new data center approvals, and Deutsche Bank analysts warned last week that SpaceX’s Texas compute capacity could face delays. SpaceX and Tesla shares both fell after the midterm results.

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A slowdown would favor companies that already own capacity. SpaceX acquired xAI in February and has been renting data centers to outside AI labs before the space is needed for Grok. At the Baron Investment Conference on Friday, Musk said SpaceX was “getting 50 billion a year for 35 billion dollar investments” and that it can bring a data center online in eight or nine months, compared to two and a half years for competitors. He also said SpaceX is tracking toward an annualized revenue rate above $100 billion in December, with a “best guess” of $500 billion by December 2027.

Musk’s reply points to the other side of the clause. Anthropic has signed large compute agreements with Amazon, Google and Microsoft, and if that capacity comes online faster than new construction slows, the AI lab would have its own leverage to renegotiate or leave. Musk has called Anthropic “obviously currently the leader in AI,” and it remains one of SpaceX’s largest compute customers.

SpaceX shares rose more than 2 percent in overnight trading late Sunday after closing Friday at $134.27, according to Stocktwits.

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Investor's Corner

Musk’s Tesla and SpaceX decline after Democratic Midterm sweep

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Credit: Grok

Tesla and SpaceX shares fell on Wednesday after Democrats swept both chambers of Congress. The decline stood out as broader market securities recovered and turned positive, while both of Musk’s publicly traded companies lagged.

CEO Elon Musk already joked about the unsuccessful campaigning for the Republicans, but now the new party will make pretty drastic changes to how it handles Tesla and SpaceX, and those companies will adjust their outlook.

Elon Musk hilariously comments on Midterm election results

Let’s take a deeper look.

Tesla ($TSLA)

Tesla shares traded lower during the regular session after Democrats secured both the House and Senate. The stock was down 2.32 percent at around 1:45 p.m. on the East Coast, trading at around $389.30.

The pressure is tied to more than the raw scale of Musk’s political spending, estimated at $450–474 million this cycle with roughly $224 million directed at Texas. In that state, Tesla now faces a Democratic governor and a Democratic senator after Gina Hinojosa unseated Greg Abbott and James Talarico defeated Ken Paxton.

The Austin Gigafactory, Robotaxi pilot programs in multiple Texas cities, and any related AI compute expansion sit under a new state executive who campaigned against certain corporate subsidies and floated a moratorium on new data-center construction.

Federally, Democratic control of key committees opens the door to deeper examination of Tesla’s autonomous-driving safety record, federal energy-storage and manufacturing incentives, and the national-security implications of any combination with SpaceX.

Investors are also weighing whether the company’s historically close alignment with the prior Republican leadership will invite slower permitting, additional hearings, or tighter rules on Full Self-Driving deployment.

For Tesla, the political shift adds near-term friction around state permitting and federal regulatory approvals for autonomy and energy storage. A potential merger with SpaceX may face slower review even if it proceeds.

Core growth drivers such as vehicle deliveries, energy deployments, and robotaxi rollout remain intact, yet the stock now carries a higher political-risk premium that could weigh on valuation until the company demonstrates workable relationships with the new Texas leadership and congressional majorities.

SpaceX ($SPCX)

SpaceX shares also declined in live trading on November 4 following the Democratic midterm sweep. The stock traded at $134.97, down 4.49 percent. The drop occurred even as broader indexes stabilized, highlighting a company-specific reaction to the election outcome.

Musk’s large contributions, concentrated in Texas races that both companies lost, place SpaceX’s Starbase launch facility and headquarters under a new Democratic governor.

At the federal level, Democratic control of Congress enables greater scrutiny of NASA, the Department of Defense, and other contracts that support a meaningful share of revenue, along with reviews of Starlink national-security uses and any Tesla merger. Analysts have noted that empowered committees can hold hearings and request documents on these relationships.

For SpaceX, the results raise the risk of delayed contract awards, higher compliance costs, and tighter constraints on AI and satellite infrastructure expansion, particularly in Texas where a data-center moratorium has been discussed.

A merger with Tesla could encounter political friction that slows integration of launch, connectivity, and autonomy capabilities.

While Starlink growth and launch cadence continue as primary drivers, the company faces a more contested path for federal funding and state-level operations, requiring management to rebuild ties with the new congressional majorities and Texas leadership to limit the overhang.

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