A view of CATL's headquarters in Ningde, East China's Fujian Province. File photo: VCG

The share price of Chinese electric vehicle (EV) battery maker Contemporary Amperex Technology Co (CATL) surged by nearly 3 percent on Tuesday, after the company signed a new agreement with Tesla to provide battery packs for the US carmaker through 2025.

The deal comes as another major Chinese EV battery producer Envision Group signed a deal to build a $2.4 billion plant in France and as the Chinese government stepped up support for the sector - recent developments that underscore the rapid rise of China's EV battery sector globally.

Experts said that CATL's pace of globalization might speed up after securing such an important EV client, with its batteries likely to be used in Tesla's cars overseas as well as other well-known international EV brands. 

In a stock exchange filing on Monday, CATL said it had signed a production price agreement with Tesla Inc and Tesla Shanghai Co to provide lithium batteries from 2022 to 2025. This is an extension of a previous deal that guaranteed CATL's battery supplies to Tesla from July 2020 till December 2022.

On Tuesday morning, CATL's shares opened at about 4 percent higher at 513.65 yuan ($79.6). The shares closed 2.96 percent higher. 

"[Investors] believe that CATL would get a huge order from Tesla with the latter's rising sales, which would boost CATL's market dominance and share to a great extent," Zhang Xiang, an auto industry analyst, told the Global Times on Tuesday. 

CATL's pace of internalization might also speed up with the world's largest EV maker becoming its endorsement, showing that CATL's production capabilities have reached world-leading levels, experts noted.

"It's possible that CATL's batteries will be used in Tesla's overseas cars, or CATL will establish overseas assembly plants to develop foreign markets in the next few years," said independent car analyst Wu Shuocheng. 

There are signs of a growing trend for Chinese EV battery firms to expand production overseas. On Monday, Shanghai-based Envision announced a plan to build a $2.4 billion plant in northern France to supply Renault.

Also on Monday, to further lift the sector, the Ministry of Industry and Information Technology issued plans to support innovation and development of EV batteries in the country.

However, for CATL and other Chinese firms, the biggest market will still be the domestic market despite their overseas expansion, experts said.

Wu told the Global Times that the focus of CATL's business will always be products for the Chinese mainland, as its cost and other advantages would be reduced if it exported its batteries. 

As of the end of April, CATL topped the world's EV battery market with a share of 32.5 percent, followed by 21.5 percent for LG Energy Solution and 14.7 percent for Panasonic, according to market research firm SME Research.