Since Elon Musk, CEO of Tesla, announced that Tesla would depart from its exclusive reliance on Panasonic batteries for its cars to be produced in China, battery makers in Korea and abroad have been keeping their eyes and ears alert. Yet many analysts believe that Chinese battery makers will be preferred as Musk made the announcement for an aggressive marketing campaign in the Chinese market.
However, some experts say that when the Chinese government puts an end to subsidies for Chinese-made batteries for electric cars, Korean battery makers will be able to become a new Asian partner for Tesla. LG Chem, Samsung SDI, and China CATL are mentioned as strong candidates. SK Innovation, which is building a battery factory in China, is also regarded as a dark horse.
global battery industry was rocked by a Reuters report that Chinese battery maker Lishen could supply batteries to Tesla Factory in Shanghai. But the situation has been subdued as Tesla said, “We have contacted Lishen for price estimates but no deal has been made between Tesla and Lishen.” Lishen also denied the report.
Musk said on Twitter last year that Tesla might use batteries from a wide array of companies other than Panasonic for its electric vehicles produced in Shanghai. In light of a past crisis which stemmed from the low capacity utilization of Tesla’s Giga Factory in Nevada, the United States, Tesla is likely to find additional battery suppliers that can support its annual production capacity of 500,000 units.
For this reason, the spotlight is on CATL, the world’s second largest battery producer and China’s largest battery maker. The Chinese government's subsidy policy for electric cars is CATL’s biggest merit. "If Tesla electric cars are loaded with batteries from a Chinese company, the automaker will be able to significantly slash cost for the Model 3," a local foreign media outlet said. "Tesla will be able to compete with China's electric car makers such as BAIC on an equal footing."
LG Chem, which recently announced an additional investment of 1.2 trillion won in its factory in Nanjing, China, is also mentioned as a possible second battery partner of Tesla. Less than three months have passed since LG Chem announced investment of 2.1 trillion won in the second battery factory in Nanjing in October of last year. The distance from Shanghai to Nanjing, where Tesla's factory was built, is only about 300 kilometers and a three-hour drive.
However, LG Chem's main battery products for electric vehicles are different from those for Tesla electric vehicles in terms of forms and materials. Tesla's electric vehicles are equipped with cylindrical batteries with NCA anode materials containing aluminum, while LG Chem produces pouch-type electric vehicle batteries with NCM anode materials containing manganese. However, "Cylindrical batteries are an old type and we are already producing them for light automobiles and motorcycles. Thus, there is no reason for us not to make them if Tesla requests us to make them," an LG Chem official said. “We are planning to produce cylindrical batteries in a small battery factory to be built in Nanjing."
Samsung SDI, the world's largest maker of cylindrical batteries, may also join forces with Tesla. For Tesla, Samsung SDI's biggest merit is its experience in supplying cylindrical batteries to Tesla's Energy Storage Systems (ESS). A cathode material that is mainly used by Samsung SDI in production of cylindrical batteries is the NCA type which is the same as Tesla uses. Samsung SDI was preparing for mass-production of cylindrical batteries of the 21700 standard for Tesla instead of those of the 18650 standard in consideration of the possibility of partnering with Tesla, battery industry analysts said.
Battery industry analysts also said that Panasonic decided to establish a joint venture with Toyota in 2020 to co-produce electric vehicle batteries due to the aftermaths of Mustk’s remarks. It was Panasonic’s attempt to diversify its sales structure by securing buyers other than Tesla, they added.