Tesla Nears Battery Deal with Samsung

Tesla Motors Inc. is testing a large batch of lithium-ion cells supplied by Samsung SDI Co. as a final precursor to adding the South Korean company as a second battery supplier for its growing electric vehicle lineup, The Nikkei reports.

To date, Tesla has relied almost exclusively on Panasonic Corp. for its batteries; LG Chem also provides a relatively small number of batteries to the electric carmaker. But Tesla has been in talks with Samsung SDI for several years as a safeguard to reduce supply chain risks as it adds models and volume, the Tokyo-based newspaper notes.

Tesla aims to launch its third model, the $35,000 Model 3 midsize sedan, by the end of next year. The carmaker already has received more than 300,000 reservations for the vehicle and expects combined annual production for all three EVs to jump from 50,000 units last year to 10 times that volume by as early as 2018.

In addition to buying batteries from outside suppliers, Tesla also plans to launch low-volume production later this year at its own $5 billion “gigafactory” battery plant in Nevada. Panasonic invested an initial $250 million in the facility and has pledged to up its stake to $1.5 billion in coming years.