Tesla will outsource battery production to Lg Chem

Tesla will outsource Battery Production to LG Chem

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Business is booming for Tesla in 2020.

Not only the company’s stock price is soaring, but demand for Tesla cars is increasing as well.

In order to address the growing demand for its vehicles and batteries, particularly its Model 3 and Model Y cars, Tesla placed more orders for electric car batteries. 

Some of you may be under the impression that Tesla produces its own batteries and solely relies on them. This is not the case. Not yet anyway!

Reuters reported that LG Chem Ltd will start producing batteries for Tesla vehicles at one of its local facilities in South Korea. LG Chem is the largest chemical company in the Asian country. 

 

Growing number of battery suppliers for Tesla

Initially, the company dealt exclusively with Panasonic for its supply of battery cells.

During the past few years, Tesla increased its number of suppliers and made deals with Samsung SDI and LG Chem for battery cells for its stationary energy storage products. 

Tesla vehicles produced in its Gigafactory 3 plant in Shanghai are powered by battery cells produced by LG Chem and Chinese manufacturer Contemporary Amperex Technology Co. Limited (CATL).

Exponential increase in battery supply for Tesla’s Chinese operations

An article written on by Insideevs.com indicated that Tesla may need more than 10 Gigawatts (GWh) of battery cells for its first full year of operation in China.

According to Chinese web media research Moneyball, LG Chem already supplied Gigafactory 3 with over 250 Megawatt (MWh) in Lithium-ion batteries during the past months of January and February. 

 So why the sudden increase of supply in battery cells for Tesla?

This question is raised especially considering that the company is ramping up its efforts to produce its own battery cells and unveil them during the highly-anticipated Battery Day event.

The reason behind those moves could be a simple one: Tesla’s future production of new battery cells may initially be limited in scope.

The company’s Gigafactory 1 and its production of battery packs and powerwalls is not sufficient to meet the growing demands.

Production of the Cybertruck is set to commence in 2021. Production at their Gigafactory Berlin plant, with an emphasis on the Model Y, is set to begin in the same year.  There is a growing demand for Tesla cars in the Chinese market.

The company has no choice but to increase their battery cell supply via other companies in order to meet the growing demands and their output quotas.

In any case, the equation is simple: more EVs = more clean energy = less pollution!

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