SAN FRANCISCO (Reuters) – LG Energy Solution aims to build advanced battery cells for Tesla Inc electric vehicles in 2023 and is considering potential production sites in the United States and Europe, said two people familiar with the matter told Reuters.
Tesla has yet to agree a deal that would expand LG’s place in its supply chain outside of China, one source said.
Last week, a Korean battery maker told Korean reporters that they plan to build a U.S. factory where it would make battery cells for EVs and energy storage systems, to serve U.S. customers and global customers as well as entry levels. He did not identify potential buyers then, but one of the sources said he hoped Tesla would buy the batteries.
In September, Tesla CEO Elon Musk announced an ambitious plan to develop new cells in-house, encouraging suppliers such as LG and Panasonic to embrace the untested technology or face the dangers of losing a key customer in the long run.
The Korean supplier, a unit of LG Chem, has made samples for the large format 4680 cylinder cells, the sources said, who asked not to be identified. It faces technological barriers and the challenge of scaling production, people familiar with the matter said.
“LG plans to produce 4680 cells in its new US factory. They plan to build a new 4680 cell line to deliver Tesla’s Giga Berlin in Europe, ”said one of the sources, noting that Spain is one of the candidates for the European plant.
One of the sources said that LG has never mass-produced large-format cylinder cells, although increasing battery capacity is the right call. “Tesla is a major customer, and LG can take risks,” another source said.
He said LG has not yet received orders from Tesla for the 4680 cells, which are still under development. For now, Tesla is actively promoting orders for 2170 cells used in the Model 3 and Model Y vehicles made in China, the source said.
LG declined to comment, and Tesla officials could not be reached for comment.
Tesla’s September plan to upgrade the new 4680 battery cells means reducing production costs, improving battery performance and increasing drive range. This would help Tesla ‘s drive to significantly boost electric vehicle production worldwide.
Tesla is running a pilot factory for the new battery cells in California, and is preparing to build those cells at newer plants in Texas and Germany.
Musk recently said that Tesla is in talks with battery suppliers about developing 4680 batteries. He said that Tesla will use the conventional cells for at least a few years, but will discontinue those cells over time.
LG is currently supplying smaller cells to Tesla in China, as does Chinese battery maker CATL. Panasonic has partnered with Tesla in a $ 5 billion “gigafactory” battery near Reno, Nevada.
LG is currently in a $ 2.3 billion joint venture with General Motors Co in Lordstown, Ohio, to make pouch-type electric vehicle batteries for the future of GM electric vehicles.
GM separately said it is considering building a second U.S. battery factory with LG.
The candid candid comments from LG and GM came after another Korean battery supplier, SK Innovation, hoped the White House would reverse its recent U.S. trade regulation favoring LG, saying it threatens blocked battery supply to Ford Motor and Volkswagen.
Tesla competitor Lucid Motors, which has a multi-year supply contract with LG Chem, and which is considering whether to make its own cells in, said it was interested in different cell forms, Chief Executive Peter Rawlinson earlier told Reuters.
Panasonic plans to start a test line for 4680 cells in Japan in the business year beginning April 1, according to someone familiar with the case. The two companies have not said whether they plan to collaborate on the 4680 cell product.
Tesla may need to push out the timeline for mass production, or work with partners at its latest plants to quickly implement cell production, said Caspar Rawles, an analyst at the company. research Benchmark Mineral Intelligence.
Additional commentary by Paul Lienert in Detroit, Tim Kelly in Tokyo and Heekyong Yang in Seoul; edited by Ben Klayman and David Gregorio