LG Chem To Double China Battery Capacity To Meet Tesla Demand Says Sources: Report

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  • The report added that the firm, a supplier for Tesla’s Shanghai-built Model 3, will also ship its increased output from China and Korea to Tesla’s factories in Germany and the United States
  • An LG Chem spokesman said that the company is continuing to expand capacity for cylindrical battery cells in response to growing demand from automakers but they can’t comment on specific customers

As per a report by Reuters, sources said that in order to keep up with its U.S. client’s growth in the biggest car market, South Korea’s LG Chem Ltd plans to more than double production capacity of battery cells it makes in China for Tesla Inc electric vehicles (EV) next year. The report added that the firm, a supplier for Tesla’s Shanghai-built Model 3, will also ship its increased output from China and Korea to Tesla’s factories in Germany and the United States as per two people with knowledge of the matter.

The report added that LG Chem has already added production lines in South Korea this year primarily mainly to meet demand from Tesla’s U.S. plant as per the people. The automaker has asked Japan’s Panasonic Corp to also supply its Shanghai factory as per one of the people, who declined to be identified as the matter was confidential. The report added that the person said that Tesla simply doesn’t have enough battery cells. So LG Chem is going to more than double China output.

Expand capacity for cylindrical battery cells

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The report added that an LG Chem spokesman said that the company is continuing to expand capacity for cylindrical battery cells in response to growing demand from automakers but they can’t comment on specific customers. As per the report, LG Chem, whose battery cell business became an independent unit, in October said it would triple capacity of cylindrical cells to 60 gigawatt hours by 2023, without naming Tesla or disclosing other details. The report said that Tesla was not immediately available for comment and Panasonic declined to comment.

The report added that the local government said last week, without disclosing current capacity LG Chem will invest $500 million over the next year to raise annual production capacity of 21700 cylindrical battery cells – a type used by Tesla – at its Nanjing plant by 8 GWh. The two people told Reuters the plan involved increasing the number of production lines to at least 17 from eight.

The report added that LG Chem with CATL, supplies battery cells for Tesla’s Model 3 sedan built in Shanghai, where production began last year and whose current annual capacity is 250,000 cars. The Morningstar previously reported that Tesla aims to start making its Model Y sport-utility vehicle at the plant next year, for which capacity will reach 250,000 by 2022.

The report added that one of the people said that initially, , LG Chem will be the sole supplier for Shanghai-built Model Y cars. CATL was not immediately available for comment. The person said that LG Chem’s China factory will also initially supply battery cells for Tesla vehicles in Berlin when production there begins. It needs permission should if it wants to make its own cells locally.

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