SAN FRANCISCO (Reuters) – LG Energy Solution aims to build advanced battery cells for electric vehicles from Tesla Inc. by 2023 and is considering possible production centers in the United States and Europe, two familiar people told Reuters with the subject.
One source said Tesla has not yet reached an agreement that would expand LG’s role in its supply chain beyond China.
Last week, the Korean battery maker told Korean reporters that it would plan to build an American factory where it would manufacture battery cells for electric vehicles and energy storage systems, to serve both American customers. such as world championships as well as startups. He did not identify potential customers at the time, but one source said he expected Tesla to buy the batteries.
In September, Tesla CEO Elon Musk announced an ambitious plan to develop new internal cells, prompting vendors such as LG and Panasonic to adopt unproven technology or face the risk of losing a major customer to long term.
The Korean supplier, a unit of LG Chem, has made samples for the so-called 4680 large-format cylindrical cells, sources said, asking that they not be identified. They face technological hurdles and the challenge of increasing 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 supply Tesla’s Giga Berlin to Europe, “said one source, who added that Spain is one of the candidates for the European plant.
One source said LG has never mass-produced large-format cylindrical 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 secured orders from Tesla for the 4680 cells, still in development. For now, Tesla is drastically increasing orders for 2170 cells used in Model 3 and Model Y vehicles made in China, the source said.
LG declined to comment and could not contact Tesla officials.
Tesla’s September plan to develop the new 4680 battery cells aims to reduce production costs, improve battery performance and increase driving range. This would help with Tesla’s drive to significantly increase the production of electric vehicles around the world.
Tesla has a pilot factory for new battery cells in California and is preparing to build them on newer plants in Texas and Germany.
Musk recently said Tesla is in talks with battery suppliers about developing 4680 batteries. He said Tesla will use the current cells for at least a few years, but will “remove” those cells over time.
LG currently supplies smaller cells to Tesla in China, as does Chinese battery manufacturer CATL. Panasonic has partnered with Tesla on a $ 5 billion “factory” battery near Reno, Nevada.
LG currently has a $ 2.3 billion joint venture with General Motors Co. in Lordstown, Ohio, to manufacture bag-type electric vehicle batteries for future GM electric vehicles.
GM said separately that it is considering building a second battery factory in the United States with LG.
Unusually sincere comments from LG and GM came after another Korean battery supplier, SK Innovation, expected the White House to overturn a recent U.S. trade ruling in favor of LG, saying it threatens to disrupt the supply of batteries in Ford Motor and Volkswagen.
Tesla rival Lucid Motors, which has a multi-year supply deal with LG Chem, and is considering whether it can make its own cells at home, said it is interested in different cell formats. Peter Rawlinson, general manager, told Reuters.
Panasonic plans to start a line of testing for 4680 cells in Japan during the business year starting April 1, according to a person familiar with the matter. The two companies have not said whether they plan to collaborate in the production of the 4,680 cells.
Tesla may have to take the deadline for mass production or work with partners at its newer plants for cell production to work quickly, said Caspar Rawles, an analyst at researcher Benchmark Mineral Intelligence. .
Additional reports by Paul Lienert in Detroit, Tim Kelly in Tokyo and Heekyong Yang in Seoul; edited by Ben Klayman and David Gregorio