US electric vehicle manufacturer Tesla has formed a new partnership with one of China's largest battery producers. Tesla's partnership with CATL was officially announced late last week, in what some investors have called a massive win-win situation for both companies.

CATL will officially become Tesla's third major battery supplier, joining companies such as South Korea's LG Chem and Japan's Panasonic. The exact details of the deal were not immediately disclosed, but Tesla revealed that it will be providing further information sometime in April.

Given Tesla's increased presence in China and the establishment of its Gigafactory in Shanghai, analysts had somewhat predicted that the US company would eventually need to forge an alliance with a domestic battery producer. Forming a partnership with CATL would allow Tesla to better respond to the large demand for its products in the Chinese market, negating its need to import batteries from Korea or Japan.

The partnership also comes as Tesla prepares to release thousands of its new Model 3 vehicles in China. Expanding its battery supply locally would greatly reduce its trade risk and improve its bargaining power. Analysts also expect Tesla's new Model 3 and its upcoming Model Y vehicles to become very competitive given its newly forced partnership with CATL.

Last year, the company managed to deliver 367,500 units in total globally. This represented a 50 percent growth when compared to its deliveries in 2018. Tesla really hit its stride last year during its fourth quarter, where it managed to deliver record 112,000 vehicles worldwide.

For CATL, landing a contract with Tesla will be a major milestone given that it effectively grants it a much larger market share in the country's rapidly growing new energy vehicle market. CATL was already one of the top players in the battery industry, effectively securing close to 50 percent of the country's market share. According to the China Automotive Battery Industry Innovation Alliance, CATL managed to install 31.46 gigawatt-hours of batteries in China last year.

Prior to landing the deal with Tesla, CATL has had major partnerships with global automakers, including contracts with big-name international firms such as Toyota, BMW, and Mercedes-Benz. It also managed to land contracts with local manufacturers such as Geely, BAIC, GAC Group, and SAIC Motor.

CATL has reportedly been quite busy with its planned global expansion. Through its accelerated overseas development, the company has managed to break ground on its first overseas facility, which will be located in Erfurt, Germany. CATL plans to supply batteries directly to its European partners through its facility in Germany.