Tesla said it will sell its batteries business to Chinese smartphone maker AirPod, a move that analysts say could help ease concerns about battery issues with the AirPOD and other electric car makers.
The news, first reported by Bloomberg, is the latest to fuel growing skepticism about the future of the electric vehicle business, and raises the possibility that the battery makers could be willing to sell if the company can’t meet a $1.6 billion funding commitment.
AirPogos founder and CEO, Cheng Yu, and Tesla’s vice president for product development, Peter Lee, are expected to meet with AirPos, which has been struggling to secure financing in the past few years.
It has received about $1 billion in loans from Chinese lenders, and Lee said the company is considering selling the battery business.
In a statement, Lee said he was looking forward to the possibility of continuing to build the AirPod.
He added that the AirPad, AirPong and AirPosex will be sold separately.
“We believe in AirPoses technology and the Airpod is a great fit for Tesla,” Lee said.
The company has said it hopes to ship 10,000 AirPots this year, but the company has struggled to get financing for its plans, and its financing has been less than stellar.
It recently filed for bankruptcy protection, citing debt and losses of about $5.7 billion.
The financing problems have led to speculation that AirPoaks batteries could be subject to recalls, which would require Tesla to provide more information about what happens to its batteries.
Musk has promised to address those issues, saying in a series of interviews with Bloomberg that the company’s batteries will be returned to customers in the future.
Musk and Lee did not immediately respond to requests for comment.
The announcement of AirPoes sale comes just a few weeks after AirPodes first battery shipment.
In August, Tesla said its battery production would be cut to 20 gigawatt hours, down from 40 gigawatts.
The reduction in production would require about 10 million batteries to be shipped.
Tesla had previously announced it would build and ship 100,000 batteries annually, down nearly 50% from last year.
The battery business was originally intended to serve as a revenue stream for Tesla, but after Tesla’s acquisition of SolarCity in 2016, that business became less profitable.
The sale of the battery company could help bolster Tesla’s cash reserves, but it also could further erode confidence in its business.
It is unclear if the battery companies plans to build their own batteries, which may be cheaper than Tesla.
Tesla also is working to build an electric train.
Musk said last month that Tesla will build an “independently designed” electric train in 2020 that will be more affordable and faster than existing rail systems.
Tesla, which was founded by billionaire Elon Musk in 2002, has been ramping up its electric vehicle development and production.
The automaker’s electric trains, known as Model 3s, have become the most popular electric car on the road.