

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.
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.
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 blacklisted by Swedish pension fund AP7 as it sells entire stake
A Swedish pension fund is offloading its Tesla holdings for good.

Tesla shares have been blacklisted by the Swedish pension fund AP7, who said earlier today that it has “verified violations of labor rights in the United States” by the automaker.
The fund ended up selling its entire stake, which was worth around $1.36 billion when it liquidated its holdings in late May. Reuters first reported on AP7’s move.
Other pension and retirement funds have relinquished some of their Tesla holdings due to CEO Elon Musk’s involvement in politics, among other reasons, and although the company’s stock has been a great contributor to growth for many funds over the past decade, these managers are not willing to see past the CEO’s right to free speech.
However, AP7 says the move is related not to Musk’s involvement in government nor his political stances. Instead, the fund said it verified several labor rights violations in the U.S.:
“AP7 has decided to blacklist Tesla due to verified violations of labor rights in the United States. Despite several years of dialogue with Tesla, including shareholder proposals in collaboration with other investors, the company has not taken sufficient measures to address the issues.”
Tesla made up about 1 percent of the AP7 Equity Fund, according to a spokesperson. This equated to roughly 13 billion crowns, but the fund’s total assets were about 1,181 billion crowns at the end of May when the Tesla stake was sold off.
Tesla has had its share of labor lawsuits over the past few years, just as any large company deals with at some point or another. There have been claims of restrictions against labor union supporters, including one that Tesla was favored by judges, as they did not want pro-union clothing in the factory. Tesla argued that loose-fitting clothing presented a safety hazard, and the courts agreed.

(Photo: Tesla)
There have also been claims of racism at the Fremont Factory by a former elevator contractor named Owen Diaz. He was awarded a substantial sum of $137m. However, U.S. District Judge William Orrick ruled the $137 million award was excessive, reducing it to $15 million. Diaz rejected this sum.
Another jury awarded Diaz $3.2 million. Diaz’s legal team said this payout was inadequate. He and Tesla ultimately settled for an undisclosed amount.
AP7 did not list any of the current labor violations that it cited as its reason for
Investor's Corner
xAI targets $5 billion debt offering to fuel company goals
Elon Musk’s xAI is targeting a $5B debt raise, led by Morgan Stanley, to scale its artificial intelligence efforts.

xAI’s $5 billion debt offering, marketed by Morgan Stanley, underscores Elon Musk’s ambitious plans to expand the artificial intelligence venture. The xAI package comprises bonds and two loans, highlighting the company’s strategic push to fuel its artificial intelligence development.
Last week, Morgan Stanley began pitching a floating-rate term loan B at 97 cents on the dollar with a variable interest rate of 700 basis points over the SOFR benchmark, one source said. A second option offers a fixed-rate loan and bonds at 12%, with terms contingent on investor appetite. This “best efforts” transaction, where the debt size hinges on demand, reflects cautious lending in an uncertain economic climate.
According to Reuters sources, Morgan Stanley will not guarantee the issue volume or commit its own capital in the xAI deal, marking a shift from past commitments. The change in approach stems from lessons learned during Musk’s 2022 X acquisition when Morgan Stanley and six other banks held $13 billion in debt for over two years.
Morgan Stanley and the six other banks backing Musk’s X acquisition could only dispose of that debt earlier this year. They capitalized on X’s improved operating performance over the previous two quarters as traffic on the platform increased engagement around the U.S. presidential elections. This time, Morgan Stanley’s prudent strategy mitigates similar risks.
Beyond debt, xAI is in talks to raise $20 billion in equity, potentially valuing the company between $120 billion and $200 billion, sources said. In April, Musk hinted at a significant valuation adjustment for xAI, stating he was looking to put a “proper value” on xAI during an investor call.
As xAI pursues this $5 billion debt offering, its financial strategy positions it to lead the AI revolution, blending innovation with market opportunity.
Elon Musk
Tesla tops Cathie Wood’s stock picks, predicts $2,600 surge
Tesla’s future lies beyond cars—with robotaxis, humanoid bots & AI-driven factories. Cathie Wood predicts a 9x surge in 5 years.

Cathie Wood shared that Tesla is her top stock pick. During Steven Bartlett’s podcast “The Diary Of A CEO,” the Ark Invest founder highlighted Tesla’s innovative edge, citing its convergence of robotics, energy storage, and AI.
“Because think about it. It is a convergence among three of our major platforms. So, robots, energy storage, AI,” Wood said of Tesla. She emphasized the company’s potential beyond its current offerings, particularly with its Optimus robots.
“And it’s not stopping with robotaxis; there’s a story beyond that with humanoid robots, and our $2,600 number has nothing for humanoid robots. We just thought it’d be an investment, period,” she added.
In June 2024, Ark Invest issued a $2,600 price target for Tesla, which Wood reaffirmed in a March Bloomberg interview, projecting the stock to reach this level within five years. She told Bartlett that Tesla’s Optimus robots would drive productivity gains and create new revenue streams.
Elon Musk echoed Wood’s optimism in a CNBC interview last month.
“We expect to have thousands of Optimus robots working in Tesla factories by the end of this year, beginning this fall. And we expect to scale Optimus up faster than any product, I think, in history to get to millions of units per year as soon as possible,” Musk said.
Tesla’s stock has faced volatility lately, hitting a peak closing price of $479 in December after President Donald Trump’s election win. However, Musk’s involvement with the White House DOGE office triggered protests and boycotts, contributing to a stock decline of over 40% from mid-December highs by March.
The volatility in Tesla stock alarmed investors, who urged Musk to refocus on the company. In a May earnings call, Musk responded, stating he would be “scaling down his involvement with DOGE to focus on Tesla.” Through it all, Cathie Wood and Ark Invest maintained their faith in Tesla. Wood, in particular, predicted that the “brand damage” Tesla experienced earlier this year would not be long term.
Despite recent fluctuations, Wood’s confidence in Tesla underscores its potential to redefine industries through AI and robotics. As Musk shifts his focus back to Tesla, the company’s advancements in Optimus and other innovations could drive it toward Wood’s ambitious $2,600 target, positioning Tesla as a leader in the evolving tech landscape.
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