Tesla Motors Inc (TSLA) And Samsung Battery Deal Nears Conclusion

Tesla stockBlomst / Pixabay

Talks between Tesla Motors Inc (NASDAQ:TSLA) and Samsung SDI, a subsidiary of Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930), for the supply of car batteries, is getting more serious, according to Reuters. In the past, there has been news that Tesla Motors is hunting for a new partner to provide electric car batteries, in addition to its current partner Panasonic, and if the reports are true the search may soon be over.Tesla Motors Inc (TSLA) And Samsung Battery Deal Nears Conclusion

A step closer to deal

Executives of both companies said that the talks have not been finalized yet but discussions have reached a new level and are on the verge of finalizing, according to Reuters.

Another source said that the only hurdle in the deal is Samsung’s condition that Tesla Motors Inc (NASDAQ:TSLA) should buy other components also from Samsung Electronics Co., Ltd. (LON: BC94) like touch screens and so on.

Tesla Motors Inc (NASDAQ:TSLA) has concluded testing the Samsung battery for its upcoming cars, according to another source. Tesla will apparently use Samsung batteries in its upcoming 2015 Tesla Model X crossover.

Another source denied that both companies were in talks and nearing finalization of the deal. A source close to the development said that the lithium-ion batteries made by Samsung Electronics Co., Ltd. (LON:BC94) were not as good as Panasonic’s product. The source said that the information that a deal is near is “not accurate.”

Why does Tesla need another supplier?

Tesla Motors Inc (NASDAQ:TSLA) requirement for another battery supplier in addition to Panasonic has been in question since the news broke. One probable reason might be the that Tesla is planning to sell 21,000 or more Model S luxury sedans this year, which require a bigger battery pack than that used by typical electric cars, either 60 kilowatt-hours or 85 killowatt-hours.

Nissan Leaf, which is one of the most popular electric cars, is equipped with a 24 kilowatt hour lithium-ion battery. Model S entry level version uses 60 kwh battery pack, and less than 30 percent of buyers opt for that.

There is no exact information over the price of these Model S battery packs and how much they are costing Tesla. However, Tesla Motors Inc (NASDAQ:TSLA) seems to have the lowest cost-per-kWh of all electric car makers in the Industry.

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at [email protected]

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