LG Energy Solution expects to assemble advanced battery cells for Tesla Inc electric vehicles in 2023 and is thinking about potential production sites in the United States and Europe, two individuals acquainted with the matter told reporters.
Tesla has not yet consented to a deal that would grow LG’s role in its supply chain beyond China, one of the sources said.
A week ago, the Korean battery creator disclosed to Korean journalists it intends to assemble a U.S. manufacturing plant where it would make battery cells for EVs and energy storage systems, to take into account the U.S. and global customers as well as startups. It didn’t distinguish potential clients at that point, however, one of the sources said it was trusting Tesla would purchase the batteries.
In September, Tesla CEO Elon Musk declared a goal-oriented plan to grow new cells in-house, inciting providers like LG and Panasonic to embrace the unproven technology or face risks of losing a significant client for the more extended term.
The Korean provider, a unit of LG Chem, has made samples for the so-called 4680 large-format cylindrical cells, said the sources, who asked not to be distinguished. It faces technological obstacles and the challenge of scaling up production, individuals acquainted with the matter said.
“LG plans to produce 4680 cells at its new U.S. factory. They plan to build a new 4680 cell line to supply Tesla’s Giga Berlin in Europe,” one of the sources said, adding Spain is one of the candidates for the European plant.
One of the sources said LG has never mass-produced such large-format cylindrical cells, albeit expanding 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 gotten orders from Tesla for the 4680 cells, still being worked on. For the present, Tesla is pointedly boosting orders for 2170 cells utilized in the Model 3 and Model Y vehicles made in China, the source said.
LG declined to comment, and Tesla authorities couldn’t be reached for comment.
Tesla’s September plan to build up the new 4680 battery cells is intended to decrease production costs, improve battery performance, and increment driving range. This would assist with Tesla’s push to help electric vehicle production essentially around the world.
Tesla is running a pilot factory for the new battery cells in California, and getting ready to construct those cells at more current plants in Texas and Germany.
Musk said recently Tesla is in converses with battery providers about creating 4680 batteries. He said Tesla will utilize the current cells for at least a few years, yet will “retire” those cells over time.
LG as of now supplies more modest cells to Tesla in China, as does Chinese battery creator CATL. Panasonic has cooperated with Tesla in a $5 billion battery “gigafactory” close to Reno, Nevada.
LG at present has a $2.3 billion joint endeavor with General Motors Co in Lordstown, Ohio, to make pouch-type electric vehicle batteries for future GM electric vehicles.
GM said independently it is thinking about building a second U.S. battery factory with LG.
The uncommonly candid comments from LG and GM came after another Korean battery provider, SK Innovation, trusts the White House would overturn a new U.S. trade ruling favoring LG, saying it takes steps to disturb battery supplies to Ford Motor and Volkswagen.
Tesla rival Lucid Motors, which has a multi-year supply manage LG Chem, and is thinking about whether to make its own cells in-house, said it is keen on various cell formats, Chief Executive Officer Peter Rawlinson prior told reporters.
Panasonic plans to begin a test line for 4680 cells in Japan in the business year starting April 1, as indicated by an individual acquainted with the matter. The two organizations have not said if they intend to team up on the production of the 4680 cells.
Tesla may have to push out the time period for mass production, or work with partners at its fresher plants to get cell production-ready for action immediately, said Caspar Rawles, an investigator at analyst Benchmark Mineral Intelligence.