Tesla is reportedly exploring the idea of buying local batteries for its factory in China, from a supplier other than Panasonic.

Panasonic has been Tesla's partner in creating batteries for its electric cars from the outset of Model S production and co-owns the Nevada battery-production Gigafactory that produces far more electric-car batteries any other. 

According to a new Reuters report, Tesla could be on the verge of an agreement with Chinese battery manufacturer Lishen to supply batteries for the Model 3 sedans that will be made at Tesla's new Chinese factory as soon as later this year. The report cites two people familiar with the situation.

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One said the companies had formed a preliminary agreement, while the other indicated that Lishen and its batteries still have to go through Tesla's lengthy supplier certification.

Both companies denied to Reuters that they had signed such an agreement, though Tesla acknowledged it gathered a quote from Lishen to supply batteries for the Chinese Model 3.

Tour of Tesla battery gigafactory for invited owners, Reno, Nevada, July 2016

Tour of Tesla battery gigafactory for invited owners, Reno, Nevada, July 2016

In a tweet in November, Tesla CEO Elon Musk said the company would source batteries locally for cars made in China and that it planned to diversify its supply sources, including batteries.

One of the Reuters sources said that Lishen was still working out what size cells Tesla would need, and neither knew how many the company might order.

Lishen currently produces batteries for some Hyundai hybrid and electric cars, as well as for Apple and Samsung electronics.

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Tesla's batteries, up until now supplied exclusively by Panasonic from the Nevada Gigafactory, have become known for their performance and longevity, if also for their occasional flammable properties in accidents and sometimes otherwise.

When he announced the groundbreaking for the new Chinese factory, Musk said it would produce lower-end, more affordable versions of the Model 3 there, and eventually the company's upcoming Model Y smaller SUV.

If the cars are to be more affordable, more affordable batteries may be in order too.