What Giant Battery Production Rumors Could Mean for Tesla Stock

Although recent weeks have brought turbulence to Tesla (NASDAQ:TSLA), such as through the failure of the Build Back Better Act, not all hope is lost. In fact, the electric vehicle leader may very well be looking ahead to a big catalyst. It seems there is a development in the works that would bring good things for Tesla stock.

TSLA stock: Tesla Super Charging station on Stockdale Hwy and the 5 fwy. Tesla Supercharger stations allow Tesla cars to be fast-charged at the network within an hour.

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The Latest Driver of Tesla Stock

Much of Tesla’s coverage this week has centered around Elon Musk’s recent confirmation that he will be paying $11 billion in taxes this year.

Today brought an exciting announcement for the entire EV sector, though, that no one should ignore.

Electrek reports that Chinese battery cell producer Gotion High-Tech has entered into an agreement to provide lithium iron phosphate (LFP) battery cells to an unnamed partner, described as a “large, U.S. automaker.” This news broke this morning and Tesla stock is up 3.4% at the time of writing.

While these two things aren’t necessary linked, the news is still worth noting. Tesla stock has had a rough few weeks as analysts predict a difficult year ahead for both the EV sector. Its month of declines haven’t been helped by Musk’s share offloading.

Today’s rumor is still only speculation. But as we know, speculation can push a stock up. If these rumors are true, they would certainly provide a needed boost for Tesla stock.

The Road Ahead

The U.S currently does not have an LFP battery production facility. For Tesla, that definitely hasn’t been convenient. In October 2021, the company announced it was transitioning all Model 3 Standard Range production from its Fremont, California facility to LEP cells. The company has confirmed that it wants the battery production to be done closer to home.

If we assume that Tesla is the battery producer’s new partner, it is also a safe assumption that the partnership will yield positive results for the automaker. Batter production has posed roadblocks for Tesla. It remains at least a partial barrier on the company’s journey to the front of the EV race.

The Bottom Line

It’s well known that while the EV race continues to dominate markets, it is literally powered by the battery race, an industry of its own. Tesla bringing LFP cell production to the U.S. wouldn’t just help the company grow. It would help Tesla secure an even larger market share as more EV producers would come to rely on the U.S.-produced LFP technology.

Tesla stock is finally on the rise and as the year ends, it’s worth keeping an eye on. Curious investors should watch Gotion High-Tech, if for no other reason than to see who the unnamed partner turns out to be.

On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


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