Will Samsung, LG Supply Tesla With Electric Car Batteries?

Samsung and LG could become suppliers of electric car batteries for Tesla. That is if Elon Musk’s company would find the two fit to produce batteries for its Tesla Model 3. The three companies have reportedly engaged in a private discussion early this month, but nothing is set in stone yet.

On Thursday, a source familiar with Tesla’s meeting with the South Korean tech companies disclosed to The Korea Herald about what transpired among the three. According to the source, when Tesla officials visited Korea in early October, they grabbed the opportunity to meet with Samsung SDI and LG Chem executives.

Samsung SDI is Samsung Electronics’ storage battery manufacturing company, which was founded in 1970. On the other hand, LG Chem is the largest Korean chemical company that was founded in 1947. Both companies at present produce high quality energy storage systems.

During the meeting, Tesla asked Samsung and LG about the lithium-ion cylindrical cells they produce. “[Tesla officials] asked for Samsung and LG’s lithium-ion cylindrical cells’ specifications and quality control for electric cars,” the source said. However, Tesla officials did not make proposals to the South Korean companies during their meeting. It isn’t known if Tesla has made arrangements for them to meet again at another time.

Tesla has been relying on Panasonic for its supply of electric car batteries since 2008. In the recent years though, industry speculation point to the possibility that Tesla may be considering Samsung SDI to be another supplier. Musk addressed this rumor in June 2016, saying that this assumption is not true at all. “Tesla is working exclusively with Panasonic for Model 3 cells. News articles claiming otherwise are incorrect,” Musk said to Reuters via email at the time.

Although Musk has already dispelled the rumor, the talks between Tesla, Samsung and LG reignited the speculation that the Palo Alto-based automaker could be looking for other battery suppliers. This is amid reports that Model 3 production is suffering battery supply delays. Tesla originally planned to build 1,500 units of the Model 3 this third quarter, but the company only managed to come up with 260 units.

“Panasonic may have an initial shortage supply issue for the Model 3 as the construction of their Gigafactory is still underway,” Center for Advanced Batteries at the Korea Electronics Technology Institute former director Park Chul-wan opined. “If so, Tesla may use Samsung and LG’s lithium-ion cylindrical cells to make up for the temporary shortage. Still, Tesla is unlikely to see the partnership as long-term due to the giant battery plant.”

It won’t be surprising if Tesla would indeed tap Samsung and LG for its electric car battery supply. After all Samsung SDI is supplying Tesla energy storage systems, while LG Chem has supplied batteries for Tesla’s Roadster in 2015. Both Samsung and LG declined to comment on the private meeting that took place with Tesla.

Late last month, Nikkie found out that Tesla tapped Samsung SDI to be its main supplier of battery cells for its Australian energy storage facility. Tesla reportedly turned to Samsung and not to its partner, Panasonic, because the former was more capable of immediately providing the cells, while the latter was preoccupied with orders for the electric car batteries.

It’s quite possible that, like what Park Chul-wan said, Samsung and LG could end up only providing temporary assistance to Tesla. Musk’s company and Panasonic are already building a massive Gigafactory in Nevada that would be capable of manufacturing enough lithium-ion batteries for 500,000 vehicles per year by the year 2020.