“Don’t put all your eggs in one basket,” my old Irish grandmother liked to say. Tesla Motors is following her advice when it comes to who will supply it with batteries for its cars and energy storage products. Even though Panasonic is a major partner in the Gigafactory currently under construction in Nevada, the company still wants to have an anchor to windward and is turning its attention to several battery makers in Korea, according to Korea Times.
LG Chem, which is heavily involved with General Motors and the Chevy Bolt, was the original supplier of battery cells for the Tesla Roadster. It already has built a good working relationship with Tesla based upon meeting production commitments, competitive pricing, and on-time delivery performance.
“Tesla intends to use more Korean technology on its Model 3. It decided to use tires manufactured by Hankook Tire and LG Display will possibly be supplying its OLED panels for the automotive systems. Additionally, Tesla is testing the manufacturing capability and production of LG Chem, Samsung SDI, and SK Innovation,” said a Korean official on May 17.
Tesla executives recently visited key research centers at LG Chem, Samsung SDI, and SK Innovation, holding working-level meetings with all of them. The meetings are part of Tesla’s strategy to increase the number of sources it has for battery needs.
The upcoming Tesla Model 3 has shocked the automotive world by getting ~400,000 reservations since it was introduced just 6 weeks ago (last we heard … ~1 month ago). Together with Chevrolet’s upcoming all-electric Bolt, many industry observers think the world is witnessing the “third wave of adoption” for electric vehicles. They see the market reaching a tipping point where electric vehicles become a viable choice for mainstream drivers.
“This is why LG Chem, Samsung SDI and SK Innovation all are keenly interested in boosting their tie-up with Tesla. The three Korean battery manufacturers can’t afford to lose the new business given the Model 3’s impressive initial responses from customers,” said an unnamed Korean official.
An LG Chem spokesman said the largest battery supplier in the world has no official comment about its business with specific clients. Samsung SDI said it has no authority either to confirm or to deny business deals with its major clients. SK Innovation wasn’t available for comment.
Although Tesla until now has used standard cylindrical lithium-ion battery cells, known in the industry as 18650 cells, many manufacturers have been using rectangular or pouch-type cells. Different cell configurations have differing power and energy density characteristics. Packaging considerations within a battery pack are also important.
LG Chem favors pouch-type cells, while Samsung SDI focuses on rectangular cells, according to sources. Tesla may be keeping its options open with regard to what type of cells will best meet its needs in the future. And it never hurts to have two or more suppliers competing for your business.