By Ben Klayman

DETROIT (Reuters – U.S. electric vehicle company Electric Last Mile Solutions Inc. announced on Thursday it has entered into a supply agreement with China’s Contemporary Amperex Technology Co Ltd.

The deal’s financial terms, which is expected to last through 2025, have not been disclosed. CATL’s battery power powers the Class 1 small delivery vehicle that ELMS built last month at its Mishawaka, Indiana plant.

According to an ELMS spokesperson, the companies also plan on establishing a CATL plant in America that will make batteries and then ship them to Indiana’s ELMS plant for assembly.

Rob Song (ELMS deputy chief financial officers) stated that they had reached an important landmark to guarantee battery capacity within a very challenging supply environment.

As carmakers push to make electric cars more affordable, battery manufacturers are increasing production in order to satisfy the rising demand worldwide.

CATL is a supplier to many international automakers like Tesla (NASDAQ:) Inc., Volkswagen AG, (OTC): and General Motors Co. CATL was offered incentives by Kentucky State officials to open a possible battery pack plant in the state of Kentucky.

Ningde (China-based CATL), has already established U.S. sales office. Previous comments on American market plans were not made. The United States is now competitive against China because President Joe Biden supports the adoption of electric vehicles.

CATL has entered into a partnership with ELMS to provide lithium-iron phosphate battery (LFP) using a more simple cell-to–pack technology. LFP is safer and less costly than other battery cathodes made of cobalt or nickel.

Troy, Michigan’s ELMS went public this August. It was a reverse merger of a special purpose acquisition company (SPAC) and a Troy, Michigan-based ELMS. Despite the impact from COVID-19 as well as industry supply chain issues, it said it would build 1000 vans in 2018.

ELMS is planning to make a bigger Class 3 truck within the second half in 2022 after the successful small van.