Tesla Inc. agreed to purchase batteries from South Korea's LG Chem Ltd. to power its electric vehicles that are manufactured in China, Bloomberg News reported Aug. 23, citing people familiar with the matter.
Tesla already has an existing long-term battery supply deal with Panasonic Corp., but the companies suspended their plans for an expansion of their Gigafactory 1 in Nevada in April. Two months later, CNBC reported, citing former and current Tesla employees, that the carmaker was planning to produce its own battery cells to reduce its dependence on Panasonic.
In March, Bloomberg reported that the Silicon Valley-based electric carmaker has also been in talks with Contemporary Amperex Technology Co. Ltd. about a battery supply deal as the company looks to secure multiple battery suppliers for its China-made cars.
Most recently, sources told the news outlet that talks between Tesla and CATL are continuing but are taking time as parties discuss technical specifications.
Bloomberg said the batteries that will be produced by LG Chem at its Nanjing factory, about 200 miles west of Shanghai, would be used initially for the Tesla Model 3, which will be manufactured at Tesla's Shanghai gigafactory. The Shanghai factory is Tesla's first outside the U.S.
As soon as Tesla releases its Model Y compact crossover car, LG Chem will also produce the batteries for them, the report said.
A spokesman for LG Chem told Bloomberg that the company does not comment on issues related to customers, while Tesla representatives in China reportedly did not respond to multiple requests for comment. Bloomberg said a CATL representative declined to comment.
