Share prices of Chinese electric carmaker BYD jumped by more than 2.5% after one of its executives hinted that it would be supplying battery packs to Tesla. The senior executive said in an interview with a  state media anchor on Wednesday that it was in the process of shipping batteries to Tesla.

BYD's executive vice president, Lian Yubo, told the news anchor that the company has a close relationship with Tesla and its founder Elon Musk. He added that BYD would "very soon" become a major supplier of batteries to the world's most valuable electric carmaker.

BYD, itself one of the largest electric vehicle manufacturers in the world, has been developing its battery manufacturing business over the last few years. It has become a supplier of advanced battery packs to several automakers, including Toyota.

According to BYD's most recent annual report, rechargeable batteries and photovoltaics accounted for 7.29% of the company's revenue stream in 2021, dwarfed by the more than 50% portion taken up by autos and related items.

Apart from working on its battery manufacturing capacity, BYD has also been developing new types of electric batteries for future EVs. In 2020, BYD unveiled its new type of lithium-iron-phosphate (LFP) battery called the Blade battery. BYD claimed that its new battery is much safer than other similar LFP battery types, stating that it is much less likely to catch on fire even when damaged.

CATL, another major Chinese battery manufacturer, is currently Tesla's only supplier of LFP batteries. CATL's batteries have been installed on all of Tesla's vehicles made at its Shanghai factory since 2020. CATL had around 25% of the worldwide EV battery market share in 2020, considerably ahead of BYD's 7%.

Nearly half of Tesla's vehicles manufactured in the first quarter were fitted with LFP batteries, a less expensive alternative to the nickel-and-cobalt-based cells majorly used by western electric vehicle manufacturers. Tesla's major suppliers of nickel-and-cobalt-based cells are Panasonic and LG Energy Solutions.

BYD's Hong Kong-listed shares rose 2.65%, reflecting broader strong sentiment in the IT sector, with the Hang Seng Tech index rising 2.84%. Other Chinese EV producers' stocks increased in Hong Kong, with Nio up 4.68% and Xpeng up 5.32%.

Following the statements, mainland-listed shares of Chinese battery producer and Tesla supplier Contemporary Amperex Technology fell more than 6%. Meanwhile, Panasonic shares in Japan fell 0.8%, while LG Energy Solution in South Korea fell 1.39%. Both companies also supply Tesla with EV batteries.