LG Chem to double China battery capacity

SEOUL: South Korea’s LG Chem 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 US client’s growth in the biggest car market.

The firm, a supplier for Tesla’s Shanghaibuilt 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 plan comes as Tesla, LG Chem’s primary customer, scrambles to secure cells as part of an aggressive global production expansion plan, as it targets soaring demand fanned by governments promoting EVS to curb air pollution.

LG Chem has already added production lines in South Korea this year mainly to meet demand from Tesla’s US plant, the people said. Moreover, the automaker has asked Japan’s Panasonic Corporation - which supplies the U. S. plant - to also supply its Shanghai factory, said one of the people, who declined to be identified as the matter was confidential.

“Tesla simply doesn’t have enough battery cells,” said the person. “So LG Chem is going to more than double China output.”

Tesla’s growth represents a boon for LG Chem, Panasonic and Chinese supplier Contemporary Amperex Technology Co Ltd (CATL) , with Chief Executive Elon Musk revealing plans in September to increase purchases.