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Tesla’s demand forces LG Chem to more than double battery cell production

LG Chem plans to apparently more than double its battery cell production in order to support demand from one of its newer customers: Tesla.

For the longest time, Tesla only used cells from Panasonic in its vehicles, but it validated cells from other manufacturers for the first time last year.

It started with LG Chem’s cells to support Model 3 production in China.

Now LG Chem, which also supplies other automakers like GM, Hyundai, and many more, is apparently planning to greatly increase its production capacity to support Tesla.

The Korean-based battery manufacturer reportedly plans to more than double its battery production capacity in China (via Reuters):

” 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, sources said, to keep up with its U.S. client’s growth in the biggest car market.”

More specifically, LG Chem confirmed that it is investing $500 million over the next year to increase its annual production capacity of 2170 cylindrical battery cells, the specific format used by Tesla in its Model 3 and Model Y, by 8 GWh at its Nanjing factory located near Tesla Gigafactory Shanghai.

This increase alone could support the production of at least 100,000 Model 3 and Model Y vehicles – and more depending on the battery size mix.

Aside from China, LG Chem also plans to increase production capacity in Korea to support production of Tesla vehicles in Germany and in the US:

Reuters reports:

“The firm, a supplier for Tesla’s Shanghai-built Model 3, will also ship its increased output from China as well as Korea to Tesla’s factories in Germany and the United States, said two people with knowledge of the matter, signalling an increased role in the supply chain of the world’s leading EV manufacturer.”

The company is reportedly already adding new production lines to its Korean factory to support Tesla’s upcoming new factories in Germany and in the US.

While Tesla recently announced its plans to manufacture its own battery cells, it will take years for the automakers to ramp up to a significant production capacity and it plans to use suppliers for the foreseeable future.

LG Chem has recently received some bad press in the EV world as its battery cells are at the center of two recalls for the Hyundai Kona EV and Chevy Bolt EV related to the potential for battery fires.

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