LG Chem will supply batteries to Tesla. At its factory in Shanghai, China, the first overseas production base for the U.S. electric vehicle make, Bloomberg reported Sunday. The company is a subsidiary of LG Electronics, Korea.
LG Chem has not officially confirmed it. But industry sources have accepted LG Chem’s alleged supply delivery to Tesla as a given fact.
Citing multiple sources familiar with Tesla’s internal affairs, Bloomberg reported that the two companies agreed to use LG Chem batteries. Tesla will use them for electric vehicles produced by its Shanghai plant in China.
Tesla will first use LG Chem batteries for “Model 3”. The model will be produced in full-scale from the end of this year at its Shanghai plant. It also plans on using it for the corresponding model. For the compact crossover vehicle, “Model Y”. It scheduled to release the later next year, said the new agency.
Tesla started construction of its electric vehicle factory called ‘Giga Factory’ in Shanghai’s Linkang Industrial District in early January this year. And the factory has an annual production capacity of 500,000 unit.
Shares of LG Chem surged in the afternoon, while shares of Japan’s Panasonic and China’s CATL fell, Bloomberg added. Both Panasonic and CATL compete with LG Chem for the supply of Tesla batteries.
LG Chem said only that it could not confirm the report.
Battery industry sources have seen high possibility of LG Chem’s supply of Tesla’s batteries. In addition, LG Chem is building two more electric vehicle batteries in the Binjiang Economic Development Zone. After two battery plants located in the Shingang Economic Development Zone in Nanjing. Which is closer to Tesla’s Shanghai plant.
It also decided to invest a total of $1.2 billion in two Xinkang battery plants in January this year. With the aim of nurturing Nanjing as a global battery export base.
Bloomberg News also said LG Chem will produce and provide 21700-type battery cells in Tesla at its Nanjing plant. Which has a larger capacity than older batteries.
