Tesla China battery cell supplier Contemporary Amperex Technology Co. Ltd. (CATL) unveiled its sodium-ion battery earlier today, along with a solution that could integrate the cells with lithium-ion batteries in a single pack. The sodium-ion cells are a more cost-effective option than the lithium-ion batteries, opening the door for lower prices in the EV battleground market of China. The introduction of sodium-ion cells is an alternative option to the lithium-ion cells Tesla has used in its vehicles. CATL Chairman Zeng Yuqun highlighted the favorable characteristics of utilizing sodium-ion cells during the company’s online launch event earlier today. “Sodium-ion batteries have unique advantages in low-temperature performance, fast charging, and environmental adaptability,” Zeng said. “Moreover, they’re compatible and complementary with lithium-ion batteries. Diversified technical routes are an important guarantee for the long-term development of the industry.” [Tesla battery partner CATL extends supply deal to 2025] CATL said it will set up a supply chain for the new cells in 2023. The cells do not contain lithium, cobalt, or nickel, but the battery manufacturer did not disclose any cost details of the new cell. Tesla has long been working with suppliers for battery cells and has partnerships with Panasonic, LG Chem, and CATL to supply its electric vehicles with batteries. While working with third-party suppliers, the company has also researched on its own with the help of a battery team at Dalhousie University with legendary cell scientist Jeff Dahn . Tesla is not opposed to exploring battery cell chemistries favorable for electric vehicles, especially if the new cells can create more range, power, or a longer life cycle. CATL has worked with Tesla since Gigafactory Shanghai started producing vehicles in late 2019. Tesla started customer deliveries in early 2020 at the Chinese plant and has relied on CATL’s world-class battery manufacturing to keep up with growing demand in China. CATL sold 34.1 GWh in the first half of 2021, up 234% year-over-year, according to Automotive News China . The company has a 30 percent market share, but the company has been struggling with the rising cost of lithium carbonate, which has doubled this year. Additionally, nickel has also increased in price this year. Due to increased demand, lithium prices are expected to trend higher this year and into next year, especially as more automakers extend into the electric automotive sector. These forecasts have launched battery makers like CATL into a widespread effort to experiment and develop other cell chemistries that would be favorable for their clients, and sodium-ion batteries are a great alternative. Despite the sodium-ion cell’s reputation for somewhat lower energy density, CATL said that its Research and Development team had reached an energy density of 160 watt-hours per kilogram, and it should exceed 200 Wh/kg in the coming years as more experimentation continues. For comparison, lithium-ion cells can reach about 285 Wh/kg, according to K. M. Abraham , a research professor at Northeastern University. Interestingly, the solution CATL also unveiled at the event is also expected to compensate for the reduced energy density of the sodium-ion cell, while preserving the advantage the cell makeup has to offer. News of the new cell shot Tesla stock up over 4.6% in early trading hours on Thursday. At the time of writing, TSLA stock traded at $677.07, up $30.23. Disclosure: Joey Klender is a TSLA Shareholder.