SHANGHAI, Dec 13 (Reuters) - China's CATL

has told suppliers it is willing to provide them with financial

support to speed up technology innovation in battery materials

and equipment, part of efforts to relieve stress on its supply

chain amid a brutal EV price war.

It is willing to take on part of their R&D costs and make

advance payments for projects to ensure technologies make

progress, according to a CATL letter to suppliers seen by

Reuters.

The world's largest battery maker confirmed the letter,

dated simply December 2024, was authentic but declined to

comment further.

According to the letter, CATL also said it would help

suppliers with certification work to accelerate the application

and production of new battery materials and help them boost

market share.

Over the past two years, fierce price competition in China -

the world's biggest and most advanced electric vehicle market -

has meant automakers and suppliers alike are under great

pressure to cut costs.

EV market leader BYD is poised to sell more cars

than either Ford or Honda do globally, driving sales with

relentless discounts in its home market where it sells 90% of

its cars. It has asked some of its suppliers to cut their prices

further next year, a sign that the price war will only escalate.

Industry executives and analysts have warned that the price

war will force companies to reduce investment in R&D as their

profitability weakens.

CATL Chairman Robin Zeng told Reuters in an interview in

November that he recognised the importance of a profitable

supply chain with every player receiving a reasonable share of

profits for survival.

"As the big player in batteries, we want to maintain, or try

our best to maintain oxygen for everyone," Zeng said at the

time.

CATL has extended its leadership in EV batteries with a

global market share of 36.8% in the first 10 months of the year,

increasing from 35.9% in the same period in 2023, according to

SNE Research. South Korea's LG Energy Solution saw its market

share shrink to 11.8% from 13.9%.

This week CATL announced a third European factory to be

built in a venture with Stellantis in Spain. Zeng said its first

two factories in Europe would be profitable in 2025 and 2026.