- LG Chem initially had 24% of the global electric vehicle battery market
- In addition to Tesla, LG Chem supplies batteries to Volkswagen and Hyundai
- Tesla is reportedly looking for other suppliers apart from LG
According to a report, South Korea’s LG Chem Ltd will soon to start producing batteries for Tesla Inc vehicles at a domestic factory this year. It has also been revealed by a source that the decision was made after the U.S electric car maker raised orders to cope with demand.
Automakers like Tesla are also reported to be working to reduce the costs of EV batteries. Currently, the high cost of batteries is a major barrier to EV adoption. This makes electric vehicles more expensive than internal combustion engine models.
The source also said “Tesla is asking not only LG Chem but other suppliers to increase supplies, as its cars are selling well”. Meanwhile a second person with similar knowledge of the situation revealed that LG Chem is converting some of its production in South Korea to produce batteries for Tesla. An LG Chem factory in China has already been making batteries for Tesla.
According to the report, both sources spoke on condition of anonymity, citing the confidentiality of the matter. Tesla has also announced that forecast-beating global vehicle deliveries for the April to June period, shrugging off a U.S production suspension due to the coronavirus pandemic.
LG chemicals stock risen
The U.S which also runs a joint battery with Panasonic corporation in Japan added that LG Chem and China’s CATL are suppliers for its factor in Shanghai. Expanding electric vehicle subsidies in Europe and Tesla’s recent stock rally have also buoyed related stocks worldwide, despite global economic concerns around China’s cooling auto market.
”We believe LG Chem is set to benefit the most in Europe with its high market share and positioning,” said Jae Lee, chief executive officer at Timefolio Asset Management SG Pvt, a Singapore-based hedge fund that holds LG Chem shares.
LG Chem shares have risen to 2.6% , tracking an overnight rally in Tesla stock. So far, this year has seen LG Chemicals share jump to nearly 60% beating the wider market’s 2% fall.
