Tesla Execs Reportedly Met With LG Chem, Samsung SDI

3 months ago by Steven Loveday 51

Panasonic

Tesla Gigafactory Construction Update – August 17, 2017 by California Phantom

Though Panasonic has been Tesla’s sole battery partner  for its EVs since 2008, the automaker may be seeking reinforcements from competing companies.

Tesla has set a course to build about 500,000 Model 3s over the next year or two. However, the company’s production S-Curve is not going as planned, due to a recent “production bottleneck”. The automaker hasn’t given a detailed explanation as to the reason behind the lack of production other than to say that the assembly line is set to move very slow for now, and suppliers are an issue.

Tesla

Tesla has been working exclusively with Panasonic since 2008

Tesla and Panasonic are currently in the process of building the mammoth Gigafactory, but it will be years before it’s complete. Until now, it hasn’t seemed like there were issues with the automaker having enough batteries or with Panasonic struggling to keep up, but this was prior to the necessity to build so many vehicles in such a short timeframe.

Tesla produced 260 Model 3s in the third quarter, after making plans to build some 1,630+. Perhaps batteries are the issue after all?

Not that it has ‘anything to do with the price of soup’, but CEO Elon Musk was recently seen camping on the roof of the Gigafactory spurring on such speculation.

A source familiar with the situation told The Korea Herald:

“Tesla officials from the US headquarters visited Korea early this month to separately meet Samsung SDI and LG Chem’s executives.

They asked for Samsung and LG’s lithium-ion cylindrical cells’ specifications and quality control for electric cars.”

Samsung SDI exhibits multifunctional battery packs, low height cells, cylindrical batteries based on new technology standard ‘21700’ at Frankfurt Motor Sho

However, it was also disclosed that no deal of any sort was made. There could be other explanations for the visit and the requests. The automaker could be making comparisons, or perhaps there’s a plan to include different battery makers in the future as more Gigacfactories are constructed around the globe. It’s hard to know for sure exactly what Tesla’s intentions are.

LG Chem supplies the battery pack for the Chevrolet Bolt and has supplied Tesla with some batteries for the Roadster in the past. Samsung SDI also currently supplies the Tesla’s energy division, which includes home energy storage and commercial energy storage; Powerwalls and Powerpacks.   So, Tesla already has direct relationships with both battery makers, and it may just be continuing to maintain those connections.

Rumors have surfaced before that Tesla may be working on a partnership with Samsung SDI. Though, CEO Elon Musk has made it clear that the automaker only plans to use Panasonic, at least as far as the Model 3 is concerned:

“Tesla is working exclusively with Panasonic for Model 3 cells. News articles claiming otherwise are incorrect.”

Chevrolet Bolt EV battery pack supplied by LG Chem

Park Chul-wan, former director of the Center for Advanced Batteries at the Korea Electronics Technology Institute. suggested:

“Panasonic may have an initial shortage supply issue for the Model 3 as the construction of its Gigafactory is still underway.

If so, Tesla may use Samsung and LG’s lithium-ion cylindrical cells to make up for the temporary shortage. Still, Tesla is unlikely to see the partnership as long-term due to the giant battery plant.”

If we believe what Musk has said in the past, it’s probably more realistic to guess that the involvement of another battery maker could be for future projects. The Model Y will be built at a new factory and by then, there could be a second Gigafactory underway. We still don’t have any official information about Tesla’s plans for the Semi truck, and its reveal event has been pushed back twice now. Maybe a new battery venture specifically related to the Semi is in the works?

Source: The Korea Herald

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51 responses to "Tesla Execs Reportedly Met With LG Chem, Samsung SDI"

  1. M3 - reserved -- Niro/Leaf 2.0/Outlander - TBD says:

    Does make you wonder really the bottleneck resides in Reno and the ability to upramp the 2170 production.

    Samsung maybe able to help out a little with their prior, but I’d be surprised if LG Chem does since any new Tesla contract with them would be behind GM and Kia group.

    If truly batteries — that’s not a good sign.

    1. Alan says:

      And behind Nissan for the 60kWh battery leaf next year also ?

      Wild speculation at this point though.

    2. Dan says:

      Thinking about al the Tesla fanbois who keep dismissing other EV manufacturers because “the only way to secure lithium battery supply is through in-house vertical integration”

      Looks like centuries of supply chain best practices can bite back against silicon valley arrogance and hubris.

      1. Steven says:

        I’ll reserve judgment until something official is announced. It’s possible they want to produce even more than they originally planned.

      2. Pushmi-Pullyu says:

        If Tesla can’t ramp up battery supply from Gigafactory 1 fast enough to supply Model 3 production, then it will simply have to scale back that production, and scale it back quite significantly. There is no way that Tesla can get the kind of supply it needs from any other source, in the short term.

        You can poo-poo the idea of vertical integration all you like, Dan, but that is how Ford quickly ramped up production on the Model T in its day, and it’s the only way Tesla is going to ramp up Model 3 production within an order of magnitude as fast as it plans. Relying on vendors to supply batteries simply has not worked for Tesla. Panasonic has not ramped up its production as fast as Telsa needs, even with the slower ramp up of production for the Model S and X.

        Tesla plans to ramp up to making ~400,000 Model 3’s per year within a couple of years. Anybody who thinks Samsung and/or LG Chem could supply that kind of volume, does not understand the scale of the problem.

        Tesla cannot get in line behind all the customers Samsung and LG Chem are supplying, to get batteries for the TM3. If Tesla is to grow rapidly, then it must control its own battery supply. Period. A battery supply from Gigafactory 1 isn’t optional; it’s an absolute necessity.

    3. Peter says:

      Good business is to always be updated at of the rivals.
      Not put all eggs in one basket.

  2. Leon says:

    Why is there no railroad spur to the Gigafactory?

    A spur line would signal mass shipments.

    1. Viking79 says:

      They could easily mass ship by tractor-trailer, 200,000 packs a year is 550 a day, which is maybe 10 or 15 trailors worth per day.

      I imagine this is how Musk will demo the Tesla Semi, he will be his own first customer.

      1. Viking79 says:

        A Wal-Mart distribution center might handle 600 tractor-trailors per day. So the Gigafactory can handle plenty of growth without a spur line.

      2. Leon says:

        Really, 10 or 15 per day over the Donner Summit in winter? Railroad tracks are 1 mile from gigafactory and would arrive at Fremont plant’s back door.

        1. Viking79 says:

          My point is that is a tiny number of trucks to support 200k cars per year. Even 500k cars wouldn’t be a problem. Heck, truck them up to the railroad lines if you want.

        2. HVACman says:

          Trains from Reno to the Bay Area also have to cross either Donner Summit or go north to the Hallelujah Junction and cross the Sierras at Portola. Regardless of shipping method, any factory will keep a couple of weeks of parts inventory to cover short-term shipping delays. “Just in Time” inventory control can’t be so fine-tuned that a one-week highway or rail line closure will shut down production.

          A rail line would be more important to the Gigafactory for bringing in raw materials for cell production, which probably is much more economic to ship by rail than by truck.

    2. unlucky says:

      It is a bit strange, especially since a rail line runs past their factory in Fremont and their facility in Lathrop.

      Shipments would take a while, as cargo trains often go along CA-70 instead of on the rails you see from I-80. But if you send off a shipment a day then a shipment a day arrives in Fremont, it just doesn’t arrive the same day.

    3. menorman says:

      Because no Class I railroad is going to touch a shipment that short.

      1. Pushmi-Pullyu says:

        I don’t care what “class” of railroad it is; if you pay them enough for the railroad to make a profit on the shipment, then they’ll ship it for you.

        My guess is the reason Tesla isn’t rushing to build a railroad connection is that the just-in-time economic model for shipping works better with tractor-trailer shipping than with slower railroad shipping. That’s why so much freight in the U.S. moves via truck only, even for cross-country shipping.

    4. Pushmi-Pullyu says:

      “Why is there no railroad spur to the Gigafactory?”

      I’ve been wondering the same thing. One reason given for Tesla choosing the location for Gigafactory 1 was easy access to a rail line running more-or-less directly to Fremont and Tesla’s auto assembly plant. So why has Tesla not had the planned rail spur built, to connect Gigafactory 1 to the railroad?

  3. Jake Brake says:

    Maybe tesla wants a longer range model 3?

  4. Four Electrics says:

    Tesla screwed up their gigafactory; commodity battery suppliers to the rescue?

    In case it wasn’t blindingly obvious by now: for the past fifteen years, Tesla has not been good at manufacturing of any kind. Maybe they will improve in the next fifteen.

    1. ffbj says:

      Not hundreds dead from faulty ignition switches, no software to cheat emissions, no one passed out and crashed from CO leaking into the cabin of the vehicle.
      So who exactly are you comparing Tesla’s process too?

      They make the premier ev in the world and 500k want their M3.

      They have made some errors, as Musk admits, but I think their manufacturing is very good overall. For one they don’t continually ignore errors and cover them up, like many legacy companies do. Errors that lead to death or being maimed

      1. M3 - reserved -- Niro/Leaf 2.0/Outlander - TBD says:

        Don’t confuse engineering vs manufacturing.

        Tesla has some very good engineering and advanced projects like few other companies.

        It has done little for manufacturing and as lagged in fit/finish and production milestones with every project.

        That doesn’t stop folk from lining up (self included), but to say they have Lexus fit/finish quality is upselling it a bit

    2. Get Real says:

      LMFAO at the 4E serial anti-Tesla troll and Fudster.

      Why don’t you tell that lie to MB since Tesla managed to manufacture more then enough Model S to decimate the MB S Class market share?

      What is likely here is that Tesla will need more battery partners to rapidly expand with its upcoming Model Y, Semi and Pickup segments.

    3. Pushmi-Pullyu says:

      Four Electrics continued his anti-Tesla FUD campaign:

      “Tesla screwed up their gigafactory; commodity battery suppliers to the rescue?”

      Yet another Tesla basher conspiracy theory. Let’s see, how many of those over the years turned out to be true?

      What, not even a single one?

      “…for the past fifteen years, Tesla has not been good at manufacturing of any kind.”

      Reality check: Tesla is #1 in customer satisfaction among all auto makers, according to Consumer Reports surveys.

      So, 4E, I guess those who have actually bought Tesla cars disagree with your FUD pretty strongly!

  5. F150 Brian says:

    This lack of transparency by any other company would drive their investors bonkers (and their stock down), but tesla remains immune, at least for now.

    This recent visit to potential suppliers might have more to do with Model Y, semi and other upcoming projects (pickup please!). If I were musk, I’d be looking to the pros after his current “hell”

  6. Rich says:

    I thought Tesla was going to announce and start working on the next 3 to 4 Gigafactories. If Panasonic is already extended / over extended with Gigafactory 1, then it makes sense Tesla is looking for additional partners for Gigafactories 3 through 7 (gigafactory 2 is the solar plant in Buffalo NY).

    Another possibility is the additional demand for battery storage in Puerto Rico. They could be looking for additional supply to power an entire island / 3.4 million people. Not a small task to build a distributed power system for this many people in a very short time frame.

    1. Someone out there says:

      There is absolutely no money for building more gigafactories and the current one is only some 30% done yet.

      1. eltosho says:

        Ah, you are Tesla’s accountant now?

        1. Someone out there says:

          I don’t need to be, their finances is public information. It follows from being a publicly traded company.

      2. Nix says:

        Of course they don’t have the money laying around to build more gigafactories. That’s what corporate bonds are for. Major corporations typically don’t build factories out of operating cash. They issue bonds to fund growth.

        Ford and GM issue bonds too, this is normal and customary.

        https://www.kiplinger.com/article/investing/T052-C000-S002-5-firms-with-cheap-shares-plenty-of-cash.html

  7. JR says:

    I dont believe that the model 3 low produktion numbers are related to battery shortage.
    Just remember they started the 2170 produktion for the powerwall more than a year ago.
    They properly just want to know if they are getting a good deal with Panasonic and at what price other are selling battery for now.

    1. Doggydogworld says:

      They’ve sold precious few Power Walls and Power Packs (0.1 GWh). They’re using Samsung cells for the Australia project. If the GF was producing even 10% of rated capacity the surrounding desert would be full of finished cells waiting for homes.

      I wish an analyst would ask how many GWh of cells the GF has produced so far. Tesla wouldn’t answer, though, and that’s the last we’d ever hear from that analyst.

  8. LOL says:

    One thing is certain, if Tesla continues to cooperate with Samsung, the latter will transfer its wireless’ charger know-how to the former. I mean, a highly efficient cordless chargers are a must in in-city areas, for passenger cars, but for trucks as well.

  9. zzzzzzzzzz says:

    But but but..??? How about this alien Giga-dreadnought reducing price of cells by whooping 30% due to unique and impossible to duplicate vertical integration close to the Dear Leader reality distortion field? Oh, I got it now – the reality distortion field is so strong now, it can go across the center of the Earth straight to Korea!!! Maybe the Boring Company will come to the rescue here!

    Never mind that pesky “Toyota” company that started seriously threatening to bury all the obsolete NCA & NMC cylindricals with SS batteries:

    1. Get Real says:

      Hwy, it looks like fool cell shill and serial anti-Tesla troll and Fudster zzzzzz is switching his hopes from fool cells stopping Tesla (guess that one didn’t work out for you zzzz!).

      Now that Toyota’s own chief engineer admitted that Elon Musk was right about fool cells I guess that charade is getting hard to push?

      https://electrek.co/2017/10/26/toyota-elon-musk-fuel-cell-hydrogen/

      Anyways you are now switching to Solid State batteries stopping Tesla so at least we are making some progress here!

      If we keep this progress up then some day you will be driving a Tesla.

      1. zzzzzzzzzz says:

        Get Real:
        I’m not having very high hopes for SS breakthrough. I have heard about “battery breakthroughs” from idiot star-eyed fanboys like “Get Real” for decades and I’m still skeptical. But when official corporate statesman talks about it in official presentation in Tokyo Auto Show, it means more than rumors and interpretations. Funny though the last youtube link I posted got substituted by some Tesla fanboy video. Trying again:

        If it doesn’t work, google for “Toyota Presentation at the Tokyo Motor Show” on Oct 25, 2017.

        You can hear from the horses mouse what they “admit” about fuel cells too in the same video. Electrek looks like a bunch of serial liars who take Reuters article and turn it completely upside down comparing to what was said in the original. Sure, you can just believe your Electrek Pravda and never ever read original sources if you insist. All true cult members should avoid reading unapproved media without proper “explanation” 😉

        1. Get Real says:

          The joke’s on you FOOL!

          I dare you to find even one citation of me about battery “break throughs”.

          What I have said is that the current battery tech is good enough but I’m sure with all the many different R&D going on that battery tech will at least continue to develop incrementally unlike the basic tech of fool cells.

          1. zzzzzzzzzz says:

            Go to preschool silly fanboy.

            1. Get Real says:

              I guess its to late for you to grow up troll.

              I notice you can’t find ONE comment by me after claiming such–what a loser.

    2. Pushmi-Pullyu says:

      zzzzzzzzzzz said:

      “Never mind that pesky ‘Toyota’ company that started seriously threatening to bury all the obsolete NCA & NMC cylindricals with SS batteries”

      You’re taking Toyota’s vaporware claim for solid state batteries “seriously”?

      Well, that makes one of you! 🙄

      Now, I have no doubt that solid state batteries will be commercialized eventually, and possibly within the next several years. But the odds that the breakthru in commercialization will come from Toyota, or that it will be related to its laughable vaporware claim about commercialization within two years, appear pretty slim.

  10. unlucky says:

    Tesla already buys cells from Samsung for their energy storage installations. It wouldn’t be odd to use cells from other suppliers for cars too.

    I know others can’t see it but there really is a strong case for outsourcing things like cells. Tesla already does it with Panasonic, no reason not to do it with others too if you can get what you need from them. Second sourcing can help you get more supply and keep your suppliers from raising prices.

    1. Pushmi-Pullyu says:

      Tesla spending billions on building a battery “Gigafactory” is the very opposite of outsourcing, Unlucky. Tesla teaming with battery specialist Panasonic is forming a partnership, not “outsourcing”.

      And it’s not that we can’t see that auto makers have moved strongly in the direction of outsourcing within the past few decades. We can see that just fine.

      It’s you who can’t see that outsourcing can’t possibly provide a reliable supply for an auto maker which is ramping up production as rapidly as Tesla is now, or as rapidly as Ford did back in days of the Model T. In both cases, vertical integration concentrating production at one sprawling location was necessary.

      1. unlucky says:

        Panasonic is making the cells, not Tesla. That’s outsourcing. Just because Tesla owns the roof overhead doesn’t mean it isn’t outsourcing.

        I can’t see what you assert is true because it isn’t true. I’ve explained it many times. As long as you commit to making parts you can ramp up just as fast with outsourcing as doing it in-house. You not being able to see this doesn’t make it not true.

  11. ModernMarvelFan says:

    Gigafactory not ramping up fast enough?

    So, I guess it is only a mega factory right now. =)

  12. Pushmi-Pullyu says:

    I think it’s far more likely that Tesla would look to Samsung and/or LG Chem for batteries for its PowerWalls and PowerPacks. The Tesla Model 3 was built around the 2170 form factor Gigafactory battery, and it’s almost inconceivable that Tesla would switch to another supplier, after spending billions on ensuring it could control its own battery supply for the Model 3.

    In fact, there has already been one news article claiming that Tesla used Samsung batteries in PowerPacks for an installation in Australia:

    https://electrek.co/2017/08/09/tesla-powerpack-project-australia-battery-cell-samsung/

    1. Knut Erik Ballestad says:

      I agree with you that it’s very little probable that Tesla would turn to others for M3 batteries, but Samsung *do* deliver 2170 form-factor batteries!
      – Remember that Powerpacks and powerwalls also use 2170’s

      Swithcing those to other suppliers *might* allow Tesla to switch all/more internal Gigafactory production to the M3 chemistry.

      1. unlucky says:

        Any battery supplier with the ability to make a lot of batteries will produce 2170s if presented with the opportunity to ship tens of millions a year.

    2. Someone out there says:

      Yes. Most likely Tesla has an exclusivity deal with Panasonic to only use their batteries in cars. It was probably a requirement to get them onboard with the Gigafactory project.

  13. realistic says:

    When Tesla announces a delay, the general guidance for any EV advocate web site is to blame good old ABT: Anybody But Tesla. It’s always a “bottleneck” due to “suppliers”. Of course the last time Tesla actually named (Hoerbiger) and took a supplier to task over some vague evildoing, there was a fierce countersuit and a secret outcome from the brief legal event. So in reality, we never really know what the problem is, but somehow either Tesla chooses the worst suppliers in the world every single time, or merely mismanages the project. Who’s to know…

    Far be it from Mr. Loveday of Tesla worship fame to heave a wrench at the fine folks at Panasonic for unknown Gigafactory problems, but here is the not-so-subtle, not-quite-accusation:

    “Until now, it hasn’t seemed like there were issues with the automaker having enough batteries or with Panasonic struggling to keep up, but this was prior to the necessity to build so many vehicles in such a short timeframe.”

    Those freakin’ Panasonic guys! Hurting my beloved Tesla!!!

    Of course, nobody (including Mr. Loveday and me) knows what’s happening, and the default position that Panasonic may be the cause misses a key question:
    What is Tesla’s obligation to Panasonic to make this schedule happen?

    What?!? You mean Panasonic isn’t obligated to do whatever the partnership demands?

    No, they’re not – because they’re NOT partners.

    If you read the redacted but understandable agreements between the two, you’ll see that no such “partnership” exists, with the Factory Lease clearly stating “Neither party shall act in a manner that expresses or implies a relationship other than independent contractor. Moreover, all the key agreements between the two companies clearly define actions that protect Panasonic, with requirements for minimum purchases, safety stock and a general assertion that Panasonic will make a return on their investment.

    So, equal to the question “is Panasonic behind schedule and thus blaspheming the name of Musk?” is the query “has Tesla missed a key milestone that allows Panasonic to relax their own investment and production schedule?” Of course we don’t know what the situation is, but (1) the contractual relationship between the two, and (2) Tesla’s need to be, shall we say, “more prudent” in spending, makes the two concerns equally likely. Remember that Tesla delayed CapEx considerably in Q4’16/Q1’17 – not something I mean to criticize – and has transferred quite a bit of cash to the former SCTY enterprise, where they are dependent on Panasonic as well.

    But, knowing not where the cause lies, when Tesla is in the headline: blame suppliers first! Always and forever.

  14. Nix says:

    I don’t know why this has become conspiracy fodder. Tesla quite openly works with other battery suppliers besides Panasonic.

    For example, Tesla is using Samsung in Australia for grid power backup:

    https://cleantechnica.com/2017/09/30/tesla-using-samsung-sdi-battery-cells-129-mwh-south-australia-facility/

    Why would Tesla executives taking with current business partners and potential suppliers be the fodder for conspiracy theories?

    1. Nix says:

      oops! Pushy posted the same earlier from another source. my bad.

  15. Mark C says:

    As Tesla has been having plenty of success with their Powerwall product, as reported about being installed in Australia with Samsung batteries, and another Australian project coming, Puerta Rica solar and Powerwall project, it makes sense they need to keep a supplier in the wings as long as the demand for their goods outruns the Gigafactory being completed and running at full capacity.

    If Tesla can’t keep up with demand from within, they have two choices. Reduce output or outsource what they can’t make enough of. Seems reasonable to me.

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