Tesla Motors Inc (TSLA) And Samsung Planning Battery Deal

Updated on

Tesla Motors Inc (NASDAQ:TSLA) may add South Korean battery producer Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) SDI Co Ltd to its list of suppliers in a bid to expand further by manufacturing more models, says a report from Reuters citing sources. However, Reuters, citing another source familiar with the discussion, also described the deal “as being far from done.”Tesla Motors Inc (TSLA) And Samsung Planning Battery Deal

Official words

Tesla Motors Inc (NASDAQ:TSLA), as well as Samsung SDI, announced Friday that they are in discussion about the South Korean company delivering battery technology to Tesla, which with its Model S has achieved ground-breaking performance only to be crowned the best-selling electric car in the United States.

One of the spokesmen of the Samsung SDI declined to provide details on the development. The executive said, “Nothing has been decided.”

Liz Jarvis-Shean, spokeswoman for Tesla, said that both firms are holding talks but also revealed that Tesla is in discussion with other battery suppliers, as well.

“We continually evaluate best (battery) cells and technologies from all manufacturers,” Jarvis-Shean said.

Deal 90 percent finalized?

Two of the sources familiar with the talks told Reuters that the discussion was in the final stage and both companies are working to remove some minor odds in the pending contract for Samsung SDI to provide battery technology for the Model X, which will be Tesla’s next offering in 2014.

Discussions are nearing their completion, and 90 percent terms have been finalized, according to a source close to Samsung SDI. A major glitch in the deal is that Samsung wants Tesla Motors Inc (NASDAQ:TSLA) to buy other components like touch screens from Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930).

However, another source denies both the companies finalizing the deal and said that Panasonic Corp batteries are better than those of Samsung SDI. Panasonic Corp is the main battery supplier for Tesla. The source further told Reuters that information that the deal is nearing a conclusion is not true.

Tesla and critics

Tesla Motors Inc (NASDAQ:TSLA) seems to be high on confidence about the future of all electric battery cars, though some onlookers and experts still doubt the mass appeal of the electronic cars, and tag them as products for a niche class. Among these critics, some are proponents of fuel cell cars and believe the technology to be a better alternative to gasoline fueled cars.

There has not been any financial disclosure over the proposed deal, but according to a source familiar with the development, Samsung SDI is taking this deal as a positive development for the company, and thinks that the deal will enhance the image of the company to expand their business globally.

Signup to ValueWalk!

Get the latest posts on what's happening in the hedge fund and investing world sent straight to your inbox! 
This is information you won't get anywhere else!