(Yicai) June 5 -- FinDreams Battery, the electric car battery subsidiary of China's BYD, has reportedly agreed to supply Tesla's new Megapack factory in Shanghai with energy storage cells.

According to a deal inked in March, the megafactory will get more than 20 percent of its battery cells from FinDreams starting from the first quarter of next year, LatePost Auto reported today, citing a source close to the matter. The order is worth about CNY3.5 billion (USD492.8 million) a year based on market prices.

The factory, the first of Tesla's plants that make Megapack energy storage batteries based outside of the United States, will produce 10,000 Megapacks a year, equal to about 40 gigawatt hours of energy storage, so the supply from FinDreams will meet its need to make over 8 GWh Megapacks when fully operational.

"BYD offers the best price, which is close to the cost, to Tesla," according to a source close to the Shenzhen-based company.

BYD has not made an official announcement regarding the deal yet.

Tesla's Megapack factory began construction last month and is likely to become operational and start delivering its first products by the end of this year.

"The plant will be a very important production and export base, just like Tesla's Shanghai gigafactory," Tesla Vice President Tao Lin said at a ceremony to mark the start of construction. Some of the factory's products will be sold in China, with the rest exported worldwide, she added.

FinDreams shipped 22 GWh of energy storage cells last year, with its global market share more than doubling to 12 percent from a year earlier to rank second only behind China's Contemporary Amperex Technology with 40 percent, according to data from the South Korean market researcher SNE Research.

The price of energy storage cells dropped 35 percent last year and has since reached a record low of 33 Chinse cents (5 US cents) per watt-hour after the start of a price war in the market due to a surge in sales.

Editor: Martin Kadiev