Tesla may be adding Samsung as battery supplier

Tesla Motors will likely source battery cells for its electric vehicles from South Korea’s Samsung SDI.

The move will end the dominance of Japan’s Panasonic as the almost sole supplier of battery cells to the American carmaker. With growing sales of electric vehicles, Tesla apparently hopes to diversify suppliers to reduce risks.

A batch of Samsung SDI’s battery cells has arrived at Tesla’s development base in California. The volume is considered large for a pilot project, which suggests that the batteries will be used for a final test before full-scale adoption.

Tesla had been procuring battery cells almost entirely from Panasonic, whose batteries are said to have had better performance and quality than those made by other companies. South Korea’s LG Chem supplies a tiny amount of cells for Tesla sports cars.

Another advantage Panasonic has had is its investment in Tesla’s battery cell plant in Nevada, which has been running on a limited scale.

But South Korean rivals are gaining on Panasonic, whose cells are said to no longer have the kind of significant performance advantage they once did.

With Tesla targeting future annual production of 1 million units — 20 times what it produced last year — relying almost solely on Panasonic is a big risk.

So Tesla has been looking for other potential suppliers. From South Korea, LG Chem, Samsung SDI and SK Innovation are competing for its business.

LG Chem has been supplying batteries to General Motors. By building a large plant in the U.S., LG Chem has been developing a supply network in the country. Samsung SDI has been supplying batteries to Germany’s BMW and Fiat Chrysler Automobiles, improving its technology along the way. SK Innovation has cut a deal with Germany’s Daimler to supply batteries.

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