Back in the beginning of November 2018, Elon Musk announced that all production of Tesla battery modules and packs would be sourced for the new Mega Factory in Shanghai. Tesla is however, now looking for a new battery supplier.
Musk also mentioned several problems with the company’s Model 3 supply chain. This is why in November he mentioned that Tesla is looking to diversify its sources.
Tesla will manufacture all battery modules & packs at China Giga, as we do today in California & Nevada. Cell production will be sourced locally, most likely from several companies (incl Pana), in order to meet demand in a timely manner.
— Elon Musk (@elonmusk) November 2, 2018
Earlier this month, Tesla’s brand new $2 billion factory became operational. The company will aim to produce relatively affordable electric vehicles. This will allow the company to set up stable foundations in the Chinese auto market which is by far, the biggest in the world.
Tesla is entering the biggest auto market in the world
Officially, there are no details disclosed to the public as of yet. Tesla however, revealed that the Chinese battery manufacturer Tianjin Lishen already send quotes to be a battery supplier for the Mega factory. There are whispers for an already signed preliminary agreement between both parties. If that turns out to be true, then Lishen is probably still trying to figure out which battery cell size Tesla will need.
In China however, a preliminary agreement can mean anything from an acknowledgement to a statement of interest. This means that Tesla is most likely currently exploring all potential options. When asked to comment on the possible future partnership with Lishen, company representatives simply stated:
“We did not sign any form of agreement with them at the present time”
Lishen also released a similar statement, confirming that nothing has been signed with Tesla in regards to supplying batteries for the Mega factory.
At the moment, Tesla’s supplier is the Japanese behemoth, Panasonic Corp. Panasonic is currently taking hits because of Tesla’s supplier diversification filtered out last week. This has resulted into a 2% drop in Panasonic share price despite the conglomerate announcing a new joint project on alectric batteries with Toyota Motor Corp.
Other potential candidates for the Tesla battery contract could be LG Chem Ltd and Contemporary Amperex Technology. Both of these Chinese battery makers could still make the cut because nothing seems to be set in stone.
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