Global electric vehicle company Tesla has decided to install LG Chem batteries in electric vehicles produced at its factory in Shanghai, China, the Financial News reported on Aug. 23.
Electric car batteries made by LG Chem are expected to be used for the first time for Tesla's Chinese "Model 3" electric vehicles. Given that Tesla has long been the buyer of batteries from Japan's Panasonic Corp., the market believes the supply deal is quite meaningful to LG Chem.
According to the Bloomberg and battery industry on Aug. 23, LG Chem's electric vehicle battery will be installed at Tesla’s low-end Chinese electric vehicle "Model 3," which is produced by Tesla's Gigafactory near Shanghai, China, which began construction in January. In addition, Tesla's new crossover vehicle, Model Y, will also be equipped with LG Chem's batteries.
Tesla's electric cars will begin to be produced at the plant from the end of next year. LG Chem is expected to supply Tesla with "21700-type" battery cells with a larger capacity than older batteries.
The battery will be made at the LG Chem plant in Nanjing, 320 kilometers west of Shanghai, China. Bloomberg assessed that LG Chem has emerged as a powerhouse in battery manufacturing in the world as it has won orders from the well-known customer like Tesla.
A source in Bloomberg explained that the Chinese market, the world's largest car market, is becoming more important due to the poor sales environment of electric vehicles in the U.S. Due to reduction of incentives for electric vehicles, related demands are decreasing in the U.S.
China's electric vehicle market, on the other hand, is growing rapidly every year as global carmakers scramble to enter the market. Tesla is keen on supplying electric vehicle batteries to the Chinese market without a hitch. As part of that, the company has started to secure a stable supply chain for batteries through a contract with LG Chem.