Tesla Motors Inc Turns To LG Chem, Samsung For Model 3 Batteries

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Tesla is facing an enormous challenge to deliver more than 400,000 Model 3 pre-orders it has received before customers begin to lose patience. The California-based EV maker is diversifying its battery supplier base beyond Panasonic to avoid any last-minute surprises. Senior Tesla executives have approached LG Chem, Samsung SDI, and SK Innovation for the supply of Model 3 batteries.

Model 3 tires to be supplied by Hankook

Sources familiar with the matter told the Korea Times that LG Chem is highly likely to win the Tesla order due to its good pricing, on-time delivery, and output commitment. LG Chem had previously supplied batteries for Tesla Roadster, though it was in small volume. Tesla is testing the production capability of LG Chem, Samsung SDI and SK Innovation. Sources said Tesla execs recently visited the R&D centers of all three Korean companies, and held working-level meetings with them.

Another LG Group company, LG Display, will reportedly supply OLED panels for Model 3. That’s not all. The Palo Alto-based EV maker will have a lot more Korean technology in its upcoming car. The same report says that Tesla has decided to use tires made by Hankook in Model 3 after testing the samples. Hankook is the world’s seventh largest tire manufacturer, and it is well-known for producing tires for electric vehicles including Mercedes C-Class hybrid and Hyundai’s Ioniq Electric. Efficient tires can help boost the range of electric vehicles.

Korean suppliers keen to boost ties with Tesla

Tesla needs to create a massive supply chain in a very short time to begin production of its mass-market vehicle by July 1, 2017. The company recently announced a plan to ramp up annual production from 50,000 vehicles in 2015 to 500,000 cars in 2018. Tesla will freeze the final design of Model 3 by the end of the next month. With a base price of $35,000 without federal subsidies, the vehicle is expected to propel electric vehicles to the tipping point of mass adoption.

Korean companies like LG Chem, Samsung SDI, SK Innovation and Hankook are all interested in boosting their tie-ups with Tesla as it has been at the forefront of the EV revolution. One source told the Korea Times that Korean battery manufacturers can’t afford to lose business from Tesla, given the humongous consumer response for Model 3.

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