Nio (NYSE:NIO) stock is in full focus today after the electric vehicle (EV) company announced a five-year strategic cooperation agreement with battery manufacturer Contemporary Amperex Technology (CATL). This agreement will deepen the existing partnership between the two companies and “advance technological cooperation in new brands, new projects and new markets, improve supply-demand coordination, propel overseas expansion, and develop the business model centering on long service life batteries.”
Based in China, CATL has a long-standing reputation of producing efficient and reliable batteries. In 2021, the company received recognition for being number one in global EV consumption volume for five straight years. Last year, CATL launched its Qilin battery as well, which TIME characterized as one of the best inventions of 2022. The battery has a staggering range of 621 miles on a single charge and utilizes a single structure instead of many individual modules.
Here’s what NIO stock investors should know about the CATL partnership news moving forward.
NIO Stock: Nio Signs Five-Year Agreement With CATL
As a result of the partnership, these two companies will work together to build a battery supply system based on advanced battery technology. Ultimately, Nio seeks to improve its batteries and infrastructure. CATL seems to check the box as a suitable partner for the EV company. An improved battery and charging infrastructure will help further the adoption of EVs as well.
Last June, Nio announced that it would “start producing an 800-volt battery pack in the second half of 2024.” These battery packs are expected to cost between $30,000 and $45,000. At the time, CEO William Li said the company will utilize both proprietary and externally sourced batteries in the long run, a strategy similar to Tesla (NASDAQ:TSLA).
In September, Nio disclosed that it had paid $12 million for a 12.16% stake in lithium mining company Greenwing Resources. This came on the heels of rising lithium prices, which is a major component of EV batteries. The Chinese automaker also has an option to purchase 20% to 40% of Andes Litio’s issued capital. Andes Litio was acquired by Greenwing in 2021 and owns “options rights over the San Jorge Lithium Project.”
Meanwhile, Nio reported earlier this month that it had achieved record-high monthly and quarterly delivery figures. In December, the company delivered 15,815 vehicles, up 50% year-over-year (YOY). That brought total deliveries for the fourth quarter to 40,052 vehicles, up 60% YOY.
On the date of publication, Eddie Pan did not hold (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.