Tesla secures more batteries from LG Chem, says report

Tesla has reportedly secured more battery supply from LG Chem who is going to assign capacity from a Korean factory to the California-based automaker.

It wasn’t long ago that Panasonic was Tesla’s sole supplier of battery cells.

Over the last few years, Tesla started branching out and made deals with Samsung SDI and LG Chem for battery cells for its stationary energy storage products.

Then over the last year, the automaker also certified battery cells from other suppliers than Panasonic for its electric vehicles.

Tesla vehicles produced in Gigafactory Shanghai are powered by battery cells built by LG Chem and CATL.

LG Chem cells going into Model 3 vehicles built at Gigafactory Shanghai are coming from its Nanjing, China factory located near Shanghai.

Now Reuters reports that Tesla also secured battery cell supply from LG Chem’s domestic production capacity in Korea:

“South Korea’s LG Chem Ltd plans to start producing batteries for Tesla Inc vehicles at a domestic factory this year after the U.S. electric carmaker raised orders to cope with demand, a person familiar with the matter said on Friday.”

The report doesn’t state the production capacity that Tesla managed to secure with this new deal.

LG Chem is reportedly working to modify a Korean factory to produce Tesla’s battery cells.

Electrek’s Take

A question that I get a when I report on Roadrunner and Tesla’s effort to build its own cells is “if that’s true why are they still making deals to secure more battery supply from other suppliers?”

It’s simple.

Tesla’s production is battery cell constrained and it is expected to be for the foreseeable future even with a perfect ramp-up of its own battery cell production.

With a Model Y ramp-up, the upcoming production of Cybertruck and Tesla Semi, Tesla is going to need a lot of battery cells.

For example, Cybertruck production will likely end up using more battery cells than all of Tesla’s current vehicle programs combined.

Therefore, if Tesla could secure the world’s entire cell supply right now, it probably would so it’s not surprising that they are getting new contracts like this one.