Korean battery maker LG Energy Solution is looking at potential production sites in the United States and Europe and lining up Tesla as a customer.
Sources have revealed the firm aims to be turning out the advanced electric vehicle battery cells and energy storage systems by 2023 – and is hoping American EV maker Tesla will take them off their hands in a deal that would expand LG's role in its supply chain beyond China.
In September, Tesla Chief Executive Elon Musk announced an ambitious plan to develop new cells in-house, prompting suppliers like LG and Panasonic to embrace the unproven technology or risk losing a major customer for the longer term.
The Korean supplier, a unit of LG Chem, has now made samples for the so-called 4680 large-format cylindrical cells, said the sources. It faces technological hurdles and the challenge of scaling up production, they added.
One of the sources said LG has never mass produced such large-format cylindrical cells, although increasing battery capacity is the correct call. "Tesla is a major customer and LG can take risks," another source said.
He said LG has not yet secured orders from Tesla for the 4680 cells, which are still under development. For now, Tesla is sharply boosting orders for 2170 cells used in the Model 3 and Model Y vehicles made in China.
Tesla's September plan to develop the new 4680 battery cells is meant to reduce production costs, improve battery performance and increase driving range. This would help with Tesla's push to boost electric vehicle production significantly around the world.
Tesla is running a pilot factory for the new battery cells in California, and preparing to build those cells at newer plants in Texas and Germany.
Musk said recently Tesla is in talks with battery suppliers about developing 4680 batteries. He said Tesla will use the current cells for at least a few years, but will "retire" those cells over time.
LG currently supplies smaller cells to Tesla in China, as does Chinese battery maker CATL. Panasonic has partnered with Tesla in a $5 billion battery "gigafactory" near Reno, Nevada.
- Reporting by Reuters