Tesla (TSLA) secures battery cell supply from LG Chem for Model Y production in China

Tesla (TSLA) has reportedly signed an agreement with LG Chem to supply battery cells for Model Y production in China.

As we previously reported, Tesla has taken a new vehicle introduction strategy for Model Y. Unlike previous vehicle programs, which were launched in different markets with vehicles imported from Tesla’s Fremont factory in California, Tesla is only introducing Model Y in new markets once the vehicle is being produced there.

For the past nine months, Tesla has been expanding Gigafactory Shanghai to prepare for the production of the electric SUV.

The plant has more than doubled in size.

Last month, Tesla released new pictures of the upcoming Model Y Shanghai factory and it recently obtained government approval on the Model Y made-in-China – one of the last steps before starting production.

Now media reports from China and South Korea state that Tesla has signed a deal with LG Chem to supply battery cells for the electric SUV built in China (via Business Korea):

LG Chem has been chosen as the sole battery supplier for Tesla’s Model Y to be mass-produced in China in early 2021.

The automaker has been aiming to start Model Y production at Gigafactory Shanghai in the coming months to deliver the electric SUV early in 2021.

Tesla, who has been experimenting with different battery chemistries for its electric vehicles built in China, is reportedly going with NCM batteries for Model Y vehicles built at Gigafactory Shanghai:

Tesla adopted cylindrical nickel, cobalt and manganese (NCM) batteries for the new SUV model. The global electric vehicle giant chose LG Chem as the battery supplier, excluding China’s CATL and Japan’s Panasonic.

In China, Tesla currently uses CATL battery cells with an LFP chemistry for the cheaper version of its Model 3 sedan and LG Chem batteries for the longer range and more expensive versions.

The new deal with LG Chem comes amid the South Korean battery manufacturer being under scrutiny over recalls of the Hyundai Kona EV and Chevy Bolt EV over potential risk of battery fire.

Both vehicles are using LG Chem cells.

Tesla has recently announced plans to produce its own battery cells, but it will take years before it can ramp up production to support its electric vehicle programs and the automaker said that it still plans to use a mix of suppliers for the foreseeable future.