Tesla used to be the main supplier of components and batteries to Mercedes-Benz for its B-Class Electric Drive. However, the relationship between the two ended last year, after which Mercedes went on to find a new supplier. Luckily, it has finally found one strong contender.

Mercedes-Benz Finally Finds Replacement For Tesla Motors Inc Batteries

Tesla still ramping battery production

As reported by the Korea Times, a deal has been signed between the Teutonic automaker and battery manufacturer SK Innovation for installation of the Korean company’s battery cells in the next-generation Mercedes-Benz electric vehicles.

Speaking to the Korea Times, an SK Innovation official said, “With our battery cells, the German premium carmaker plans to expand its clean-energy EV lineup in full scale.”

There has been no comment from Mercedes-Benz about the report.

SK Innovation is facing tough competition from Samsung SDI and LG Chem. To meet the growing demand for batteries, SK doubled its production last year. Mercedes will bring demand and money to the company.

Though Tesla’s batteries will no longer be used in Mercedes-Benz vehicles, the electric car manufacturer intends to expand the production of its batteries, for which it is setting up its gigafactory in Nevada. Earlier, Mercedes-Benz’s parent company Daimler had a 9.1% ownership in Tesla, but it sold off all those shares in 2014.

Model 3 has to succeed

Tesla announced that on Mar. 31, it will unveil the Model 3, which is said to be the most affordable electric car from the automaker to date. On the very same day, the company will begin accepting reservations for its mass market car. The vehicle will start at $35,000 (excluding incentives), and deliveries will begin in late 2017.

Trefis estimates that over 30% of Tesla’s valuation is derived from the revenue the Model 3 will generate. Thus, it is very important for the company that this vehicle succeeds. At the end of 2016, General Motors plans to launch its Chevy Bolt, which is believed to be a direct competitor to the Model 3. GM’s Chevy Bolt could threaten Tesla’s ability to succeed in the mass market.

On Thursday, Tesla shares closed down 1.13% at $166.77. Year to date, the stock is down by almost 31%, while in the last year, it is down by over 18%. The stock has a 52-week high $286.65 and a 52-week low of $141.05.