Tesla adds China’s Sunwoda as fifth global EV battery supplier amid margin pressure
Why it matters: Tesla's automotive gross margins dropped to 15.4% in 2025, down from 27% in 2021.
- Tesla added Sunwoda as its fifth global power battery cell supplier, with LFP cells already shipping on Shanghai-built vehicles for export markets.
- Sunwoda's EV battery subsidiary is manufacturing third-generation LFP cells with 3C fast-charging capability at its Yiwu, Zhejiang facility for Tesla's Shanghai Gigafactory, according to Chinese outlet 36kr.
- Tesla is purchasing cells only from Sunwoda and handling module and pack assembly in-house, a notable shift from its arrangement with CATL, giving Tesla more control and pricing leverage.
- Automotive gross margins for Tesla have dropped to approximately 15.4% from a peak of 27% in 2021, driving the need for cost-cutting measures like diversifying battery suppliers.
- CATL holds a dominant 49% share of China's EV battery market as of February 2026, making Tesla's addition of Sunwoda a move to gain negotiating power against incumbents.
- Tesla's 4680 battery supply chain has largely collapsed, with partner L&F Co. writing down its cathode supply deal by 99%, making the acquisition of commodity LFP cells from Chinese suppliers a pragmatic alternative.
Tesla has added Sunwoda as its fifth global battery supplier, integrating LFP cells into Shanghai-built export vehicles to combat eroding automotive gross margins, which have fallen from 27% in 2021 to roughly 15%. This strategic move diversifies Tesla's supply chain and increases its leverage against dominant suppliers like CATL, as the company now purchases cells only from Sunwoda for in-house module assembly, a shift from its previous arrangements.
