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Investing.com– Shares of Chinese battery material suppliers Zhejiang Huayou Cobalt Co Ltd (SS:603799) and CNGR Advanced Material Co Ltd (SZ:300919) jumped on Monday after the two signed separate supply agreements with electric car maker Tesla (NASDAQ:TSLA).
Zhejiang Huayou’s shares jumped nearly 9%, while those of CNGR advanced over 6% after the announcements. While both firms are already listed as official suppliers by Tesla, the new deal will see them expand their sales to the electric vehicle maker.
Zhejiang Huayou will supply to Tesla between 2022 and 2025, while CNGR’s agreement will be between 2023 and 2025. Tesla has a sizeable presence in China, with a major manufacturing hub in Shanghai.
The Tesla Model Y is also among the best-selling passenger vehicles in China. A series of COVID-related lockdowns in the Shanghai factory had seen CEO Elon Musk urge staff to work harder and make up for a rough quarter.
Tesla’s new deal with the battery material providers comes amid a growing number of auto manufacturers pivoting into electric vehicles, which is expected to weigh on the supply of the materials used in manufacturing batteries.
Zhejiang Huayou sources cobalt from sites in Zhejiang, as well as the Democratic Republic of Congo. The firm is also listed as a cobalt supplier to iPhone maker Apple Inc (NASDAQ:AAPL).
In July, the firm also signed a supply agreement with Ford Motor Co (NYSE:F) – as the carmaker aims to ramp up its electric vehicle offerings with the new F-150 electric truck.
CNGR owns sites in Congo, Zambia, and Canada, and sells to clients in the United States, Europe, and parts of Asia.
Zhejiang Huayou and CNGR both outpaced broader Chinese stocks, which rose despite mixed economic indicators. The Shanghai Shenzhen CSI 300 blue-chip index added about 0.5%.
