© Reuters. Lishen's battery sign can be seen at headquarters in Tianjin
By Yilei Sun and Tom Daly
BEIJING (Reuters) – Tesla Inc. (O) has a preliminary contract with Chinese Tianjin Lishen for the supply of batteries for its new car Factory in Shanghai signed as it aims to reduce its dependence on Japan's Panasonic (T :), it said from two sources with direct knowledge of the situation.
The companies had not yet decided how big the contract would be for the US electric car company, and Lishen was still working on which battery cell size Tesla needed, one source said.
While Panasonic is currently Tesla's exclusive supplier of battery cells, Eles Musk, Tesla's Chief Executive, said in November that the US company would manufacture all its battery modules and packs at the Shanghai plant and intends to diversify its sources.
"Cell production is sourced locally, most likely from several companies (including Pana) to meet demand on time," Musk said in a November tweet.
Other battery manufacturers bidding for contracts may include Contemporary Amperex Technology Co. Ltd (SZ 🙂 and LG Chem Ltd (KS :).
Earlier this month, Tesla reached first place in China, the first gigafactory in China, worth $ 2 billion and plans to begin production of Type 3 (EV) electric vehicles by the end of the year.
Musk said the factory will produce "more affordable" vehicles for the Chinese auto market, the largest in the world, where the company faces increasing competition and risks from the US-Chinese trade conflict.
Tesla did not comment on this Lishen did not immediately respond to a request for comment.
Panasonic said in a statement that it was investigating various options regarding the Tesla plant in Shanghai, but nothing was decided. She refused to comment on the possibility of losing Tesla's status as an exclusive supplier.
The sources refused to be identified because the discussions are private.
Lishen says his customers range from Apple (O 🙂 and Samsung Electronics (KS 🙂 to Geely (HK 🙂 and Hyundai Motor (KS 🙂 partnered with other battery manufacturers to aggressively pursue contracts with the fast-growing EV industry.
The Chinese company started serial production of the same type of cylindrical batteries manufactured by Panasonic for Tesla Model 3 in 201
Reuters reported on Monday that Panasonic and Toyota Motor Corp (T 🙂 will go for a joint venture to produce EV batteries next year to compete with Chinese rivals.
A joint venture would build on the agreement the couple announced in late 2017 the co-development of higher energy density batteries in a prismatic cell array.
It would also help Panasonic reduce its heavy reliance on Tesla, whose production delays have weighed on the Japanese company's earnings.  Panasonic planned to relocate most of its prismatic and battery-related equipment in Japan and China to the joint venture, while those who produce batteries for Tesla would remain under the company.
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