Tesla, LG Chem Negotiate Making 4680 Cells In US And Europe: Report

Tesla Inc TSLA battery supplier LG Energy Solutions — a unit of LG Chem, is in discussions to make the automaker’s latest advanced battery in the United States and Europe, Reuters reported Tuesday.

What Happened: The South Korean company is reportedly setting its sight on building the 4680 cells in 2023 and has potential manufacturing sites under consideration in the respective regions.

“LG plans to produce 4680 cells at its new U.S. factory. They plan to build a new 4680 cell line to supply Tesla’s Giga Berlin in Europe,” a person familiar with the matter told Reuters. The source said Spain maybe the location for one of the plants. 

There is no clarity yet on what role LG will play in the production of these batteries for the Elon Musk-led company.

Why It Matters: LG Energy has made samples of the large format cylindrical cells but it faces technological obstacles and challenges in ramping up production, people familiar with the matter told Reuters.

The company is yet to produce such types of batteries on a large scale, according to a source who said, “Tesla is a major customer, and LG can take risks,” as per Reuters.

Last September, Tesla announced the design of the tabless 4680 form factor, which increases power by six times and energy by five times. The design supposedly boosts the range by 16%.

In December, it was reported that Panasonic Corporation PCRFF PCRFY is set to begin producing the new battery’s prototypes by this year and plans to set up a production line.

See Also: US Needs To Make Batteries On A Large-Scale To Avoid Chip-Like Shortage, Says Ford CEO

Details regarding 4680 emerged in January in a leak. The batteries are apparently being produced with limited human worker intervention. 

Price Action: Tesla shares closed nearly 19.6% higher at $673.58 on Tuesday and rose 2.32% in the after-hours session to $689.21.

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