To save money, Tesla has started using batteries from Sunwoda.

The collaboration between Volkswagen and XPeng, and the investment of Stellantis in Leapmotor. These stories of overseas giants teaming up with domestic small manufacturers have finally extended from the vehicle manufacturing field to suppliers.

A few days ago, Sunwoda, a battery manufacturer previously accused by Geely of having quality issues, saw a surge in its stock price.

According to a report by 36Kr, Sunwoda has now entered Tesla's supply system and is providing power batteries for the models produced at the Shanghai factory and exported to Europe. Moreover, these batteries have already been installed in a small number of vehicles.

As soon as the news came out, not only did Sunwoda's stock price soar by nearly 20%, but people's attitude towards Sunwoda also did a 180 - degree turn.

"Hey, buddy, why do you have two different sides?"

After all, under the dominance of CATL's good reputation, Sunwoda has seemed to present an unreliable image in China in the past two years. First, Zeekr claimed 2.314 billion yuan in compensation from Sunwoda due to quality defects. Then, the Volvo EX30 using Sunwoda batteries was recalled overseas due to overheating risks.

Although there has been no clear evidence showing what exactly is wrong with Sunwoda, after the negative publicity spread, there have even been very serious negative posts on various social platforms, such as "I dare not buy a car with Sunwoda batteries".

However, looking at Tesla, it is well - known for its high requirements for supply chain enterprises. It often recalls a large number of models due to a very low failure rate.

Sometimes, it even names and scolds suppliers in announcements. For example, when recalling more than 20,000 domestic Model Ys, it named Topre's steering knuckle, which had a 0.2 - 1% defect probability.

To meet Tesla's requirements in the most critical component, the power battery, Sunwoda must have some solid foundation.

Of course, what I want to talk to you guys about today is not whether Sunwoda is reliable or not.

After all, the technical requirements of car companies' tenders, the technical details of Sunwoda's lawsuits, and Tesla's internal quality control system are almost all highly confidential. Ordinary people don't know, and those who know won't tell.

What I want to say is why Tesla has taken a fancy to Sunwoda, this new partner, at this time.

Last year, in 2025, although the Model Y was still the best - selling single model globally, looking at the financial report data, it was the worst year for Tesla in recent times.

Its revenue had a negative growth (-3%) for the first time, its net profit plummeted by 46.5% compared with 2024, and its profit margin was nearly halved (from 7.26% to 4%).

I won't go into details about the various reasons, such as the increase in US tariffs, the cancellation of subsidies, and the intensifying competition in China. In short, for Tesla, saving money is definitely the most crucial main task at present.

Otherwise, it really won't be able to maintain Elon Musk's sky - high salary.

In the power battery, the component that accounts for the largest cost of electric vehicles, Tesla has spent a long time trying to reduce its manufacturing cost. However, due to overly high goals and insufficient capabilities, Tesla's self - developed "large and cost - saving" 4680 battery has made little progress in terms of technical indicators and large - scale mass production.

Therefore, the Tesla models on the market now use power batteries from LG, CATL, and Panasonic.

The advantage of buying batteries from suppliers is that they are all veterans in the battery industry, with technology, experience, and reliability, which can meet Tesla's high requirements for hardware and software.

But the problem is that their batteries are really too expensive.

Take CATL for example. Currently, it supplies the vast majority of lithium - iron - phosphate battery packs for Tesla in the Chinese and European markets. In total, it accounts for 40 - 50% of Tesla's global power battery procurement, making it Tesla's biggest supporter in terms of batteries at present.

As we all know, buying from CATL is not a particularly pleasant experience. You not only have to put up with CATL's high - handed attitude but also convince yourself to pay for its extremely high brand premium.

Yes, just like the classic saying "Car companies are working for CATL", CATL not only achieved a record - high revenue last year but also had a profit margin of 26.27%. Even looking only at the power battery segment, its profit margin reached 23.84%, 5 - 15% higher than that of its industry peers on average.

For other car companies, spending a little more money to ensure smooth and fast delivery and good quality is not a problem. But for Tesla, which urgently needs to save money now, this situation of not spending money on the most important things is really unacceptable.

This is when Sunwoda steps in.

If CATL is like Tony Stark in the Avengers, then Sunwoda is most like Hawkeye. Not as powerful, and sometimes a bit unreliable, but at least it is amiable and has the necessary strength. Most importantly, its "combat equipment" is far less expensive than its peers.

Yes, apart from its complicated relationship with Geely, Sunwoda has always had a relatively good image among car companies.

As the fifth - largest battery supplier in China, Sunwoda not only has an absolute leading position in terms of shipment volume in the second - tier group but is also an important battery supplier in China. In recent years, it has established cooperative relationships with leading car companies such as Li Auto, Xiaomi, SAIC, and Dongfeng, and has built up a good reputation.

As a second - tier manufacturer, Sunwoda's attitude is much more humble than CATL's. As long as a car company wants to cooperate, it is willing to adapt to the cooperation form and direction chosen by the car company.

There are even reports that after winning the supply project for Xiaomi's Kunlun, Sunwoda directly sent 30 - 50 R & D personnel to Xiaomi's site to respond immediately to any needs.

Not to mention its high efficiency, it really provides a lot of emotional value, right?

But for Tesla, the most important thing is definitely Sunwoda's cost - effectiveness. From its latest semi - annual report, that is, the financial report for the first half of 2025, we can see that Sunwoda completely follows the strategy of small profits but quick turnover.

The operating revenue related to power batteries increased by 22.63% year - on - year, but the gross profit margin decreased by 1.89 percentage points to 9.77%, which is less than half of CATL's. It's almost not making any money except from the battery itself.

Tesla thought, "Wow, kindred spirit!" and decisively chose to cooperate.

And according to the disclosure at the beginning of the article, the form of this battery cooperation is slightly different from before. Previously, suppliers mostly supplied Tesla with fully - packaged power battery packs.

But this time, Sunwoda only provides the most basic lithium - iron - phosphate battery cells.

Tesla will complete the remaining processes, including the battery management system, heat dissipation and support structure, and whole - pack encapsulation. It's like Sunwoda is sharing another part of the profitable part of the battery factory with Tesla, and Elon Musk can save some more money.

So, by now, you should all understand why Tesla has taken a fancy to Sunwoda. The reason is the same as when it used BYD's batteries before.

On the one hand, Tesla wants to get rid of its dependence on CATL and find a more amiable and cost - effective supplier. On the other hand, Sunwoda's current business status allows Tesla to put forward more requirements and helps Tesla save money with a lower profit margin than its peers.

However, due to direct market competition, Tesla finally terminated its cooperation with BYD. We can't yet conclude whether Sunwoda, which doesn't have similar troubles, can challenge CATL's position in Tesla's supply chain.

But perhaps from this incident, people's evaluation of Sunwoda can become less negative?

Source of pictures and materials:

Sunwoda & Li Auto reach the milestone of 100,000 battery packs off the production line! Sunwoda - Dedicated to making every battery well

Tesla (Shanghai) Co., Ltd. recalls some domestic Model Y electric vehicles

Topre Group responds to Tesla's recall incident: The product has defects, but it doesn't affect the performance

2025 Q4 Quarterly Update Deck assets - ir.tesla.com

Sunwoda supplies batteries to Tesla for global models | Exclusive by 36Kr

This article is from the WeChat official account "Chaping X.PIN", author: Fatal Empty Gun, editor: Neck Twisted Right. Republished by 36Kr with permission.