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Home / Business / Tesla in advanced talks with LG Chem about battery supply in China: Source

Tesla in advanced talks with LG Chem about battery supply in China: Source



(Reuters) – The US electric vehicle manufacturer Tesla Inc ( TSLA.O ) is in advanced talks with the South Korean LG Chem Ltd ( 051910.KS ) for batteries To procure for vehicles to be manufactured at his plant in Shanghai, said a person who is familiar with the matter.

FILE PHOTO – Tesla Chargers are shown in Mojave, California, USA, on July 10, 2019. REUTERS / Mike Blake

The move is a push by Tesla to diversify the sources of the key component for its electric vehicles. The Japanese Panasonic Corp. ( 6752.T ) is currently Tesla's exclusive supplier of battery cells for new cars.

Bloomberg said Friday that the California electric vehicle manufacturer has agreed to buy LG Chem batteries. The batteries of the South Korean chemical company will initially be used in Model 3 vehicles to be manufactured at the plant near Shanghai.

LG Chem is expanding its battery capacity in China and, depending on the source, is modifying some manufacturing facilities to produce a different type of car battery.

The company currently manufactures mainly car batteries of the bag type and other types of batteries. However, as a major battery manufacturer, it is not difficult to revise facilities to create matter catered to by Tesla's use of cylindrical automotive batteries.

The source, speaking on condition of anonymity that the talks are not public, said Tesla will probably still use Panasonic batteries in the early stages of production, and source from other vendors, including local names in the future.

Tesla did not immediately respond to Reuters request for comment. LG Chem declined to comment.

LG Chem has concluded supply contracts for battery material with the Chinese companies Huayou ( 603799.SS ) and Tianqi ( 002466.SZ ), as the South Korean battery maker is trying to expand its supply gain a foothold in China. It was announced that a joint venture with a unit of the Chinese manufacturer Geely (19459027) for batteries.

China has canceled its so-called "white list" of recommended battery suppliers, which at the time of its release in 2015, no foreign companies were represented to promote a domestic battery sector. Market for electric vehicle batteries.

Panasonic has announced that it will be able to supply batteries from Japan, the USA or China to Tesla's Chinese plant.

Elon Musk, Tesla's Chief Executive, said in November that the US company would manufacture all of its battery modules and packs at the Shanghai plant and intends to diversify its sources.

Reporting by Yilei Sun in Shanghai, Aakriti Bhalla in Bengaluru and Ju-min Park in Seoul; Edited by Sherry Jacob-Phillips and Muralikumar Anantharaman

Our Standards: The Thomson Reuters Trust Principles.

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