LG Chem To Double Battery Cell Production To Meet Tesla Demand

You need a score card these days to keep up with what company is supplying battery cells to Tesla, and the company doesn’t help much by keeping such information close to its proverbial vest. We do know that at the present time, Panasonic, CATL, and LG Chem are supplying battery cells to Tesla. We also know that Tesla is planning to manufacture some battery cells itself.

On December 1, Reuters reported that South Korea’s LG Chem will double its battery cell production capacity in China to meet Tesla’s needs in that country. LG Chem battery cells are currently used in Model 3 cars built at the Shanghai factory. LG Chem will invest $500 million over the next year to raise annual production capacity of 2170 cylindrical battery cells at its Nanjing plant by 8 GWh a source in the local government said last week. There is no official information available about the current capacity of that factory. Two people with knowledge of the situation told Reuters that LG Chem plans to increase the number of production lines in Nanjing from 8 to at least 17.

Chinese-Made Battery Cells For German & US Tesla Factories

But wait, there’s more. Those same two people said some of the battery cells made in China will be exported for use in Tesla’s German and US factories, a sign that LG Chem is becoming one of Tesla’s principle suppliers as it expands globally. LG Chem has already added production lines in South Korea this year primarily to meet the demand at Tesla’s Fremont factory, they said.

“Tesla simply doesn’t have enough battery cells, so LG Chem is going to more than double China output,” the source said. “We’re continuing to expand capacity for cylindrical battery cells in response to growing demand from automakers but we can’t comment on specific customers,” an LG Chem spokesperson told Reuters. One of the insiders added that Panasonic has also been asked to supply battery cells to the Shanghai factory.

LG Chem finalized the process of making its battery cell manufacturing division a separate business entity last week. In October it said it would triple capacity of cylindrical cells to 60 gigawatt-hours by 2023, without naming Tesla or disclosing other details. Tesla was not immediately available for comment and Panasonic declined to comment for the Reuters story.

7 Million Cells A Month

Tesla expects to begin production of the Model Y in China soon. A source told Reuters LG Chem’s Nanjing factory will be able to produce up to 7 million cells a month — enough for 323,000 cars a year. Tesla expects to manufacture a total of 500,000 Model 3 and Model Y vehicles a year once production in Shanghai reaches full capacity. The sources indicate LG Chem will be the sole supplier of battery cells for the Chinese made Model Y, at least initially.

Tesla has applied for permission to manufacture battery cells at its two new factories in Germany and Texas. How making its own batteries will affect its relationship with its suppliers is anybody’s guess. But fear not. If Tesla said goodbye to all its battery suppliers, the rest of the auto industry would be happy to accept any surplus batteries that may become available. The battery manufacturing industry has a long way to go before oversupply becomes an issue.