LG Chem’s Tesla M/S to Strengthen
The author is an analyst of NH Investment & Securities. He can be reached at j.ko@nhqv.com. -- Ed.
Driven by expanding EV production capacity and new model launches, Tesla’s demand for rechargeable batteries is to continue increasing moving ahead. LG Chem is strengthening its influence in Tesla’s rechargeable battery supply chain. By 2021, LG Chem’s Tesla M/S should reach 39%, given anticipated EV battery supply from Gigafactory Berlin.
Tesla’s rechargeable battery demand to continue rising
Tesla’s demand for EV rechargeable batteries (assuming 80kWh of rechargeable capacity per EV) is expected to climb from 67GWh in 2020 to 87GWh in 2021 to 114GWh in 2022. With Tesla continuing to expand its EV production capacity and launch new models, its use of rechargeable batteries should only pick up further moving ahead.
In particular, it is worth paying attention to Tesla’s EV plant expansion strategy, in which production plants are being established on every major continent. In the case of Asia, operation of the Shanghai plant in China began in earnest from early-2020, and in the long term, production capacity is to be pushed up to 500,000 units/year (250,000 units/year in 3Q20). In the case of Europe, operation of the Berlin plant in Germany is scheduled to start in 2H21, and in the long run, production capacity should climb to 500,000 units/year (150,000 units/year at the beginning of operation). In addition, Tesla is investing in Austin (US) for Cybertruck production. Operation of the Austin plant is slated for 2H21. Of note, when pre-ordering a Cybertruck, Tesla cites late-2021 as the expected production date.
LG Chem’s Tesla M/S to strengthen
Sourcing its EV rechargeable batteries from LG Chem, Panasonic, and CATL, Tesla has recently expanded its use of LG Chem’s rechargeable batteries in earnest. According to media sources, LG Chem is to supply rechargeable batteries for the Model Y following its supply for the Model 3 (produced in Shanghai, China). In particular, LG Chem represents an attractive option, as it is able to mass-produce circular batteries, possesses a production plant in China (Nanjing), has internalized main rechargeable battery raw materials, and is reusing major metals (lithium, nickel, etc). In 2021, LG Chem’s Tesla M/S should reach 39%, given anticipated EV battery supply to Tesla’s Gigafactory Berlin.