Tesla Motors Inc (TSLA) Impact On Samsung SDI’s Battery Business

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There’s been a lot of talk recently about how important Tesla Motors Inc (NASDAQ:TSLA) is becoming in the battery industry. Shares of Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) have been soaring recently because of news that the automaker had added it to its battery supply chain.

Tesla Motors Inc (TSLA) Impact On Samsung SDI’s Battery Business

But Barclays analysts said the benefit Samsung will receive from Tesla’s business is more of a long-term one rather than something that will be seen immediately.

Tesla’s battery needs on the rise

Analysts Sunwoo Kim and Sang Uk Kim issued a report to investors explaining why they think investors buying Samsung based on the Tesla deal may be jumping a little too early. They note that Tesla Motors Inc (NASDAQ:TSLA) has the potential to use up a large part of the cylindrical battery supply. In fact, the automaker could use up as much as 30 to 35 percent of the supply by 2017 or 2018.

Their colleague Brian Johnson said recently that he thinks Tesla shares have exceeded their fair value because of uncertainty about whether the company can successfully evolve into a mass market automaker. However, he also said that the stock “could see significant upside assuming near-perfect success as a mass market OEM.”

The Tesla – Samsung partnership

As a result, they believe investors are overestimating Tesla’s impact on Samsung. They don’t think Samsung will be able to provide batteries to Tesla Motors Inc (NASDAQ:TSLA) until at least the end of the first quarter of 2014. They note that the cylindrical batteries used by the automaker are different to the kind that’s the mainstream EV battery of Samsung SID. Thus, they believe the lack of experience working with this type of battery could affect the timing of Samsung’s ability to supply batteries to Tesla.

The Barclays analysts note that Panasonic is also ramping up its capacity to meet growing demand from Tesla and that the company will want to keep Tesla happy because of their close relationship. Panasonic has a 2 percent stake in Tesla Motors Inc (NASDAQ:TSLA). This could again push back the timing of Samsung’s penetration into the automaker’s supply chain.

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