Tesla is reportedly in the final stages of securing a lucrative electrode supply deal with Korean company LG Energy Solutions (LGES) in order to support the production of over 1.3 million electric vehicles (EVs). The deal, worth approximately $4.4 billion, will provide Tesla with a significant amount of electrodes needed for its EV production. While the details of the contract are still being discussed, it is expected that the deal will be finalized in the second half of the year.
The order from Tesla represents around 70% of the company’s projected production of over 1.8 million units in 2023 and marks a strategic shift towards in-house battery production. Tesla has been making moves to produce its own EV batteries on a larger scale, and the electrode supply deal with LGES is a key component of this strategy. The supply of electrodes is expected to begin next year and last for 6 to 7 years, coinciding with Tesla’s release cycle for new models.
LGES CEO Kim Dong-myeong confirmed earlier this year that the company would be producing Tesla’s newest-generation 4680 battery cells, which are essential for the automaker’s Cybertruck batteries. Production of these cells will take place at LGES’s factory in South Korea before transitioning to a new U.S. factory in Arizona. Additionally, Tesla has been working on its own lithium refinery and plant in Texas, which is projected to produce 50 GWh of battery-grade lithium annually.
In addition to securing the electrode supply deal with Tesla, LGES has been expanding its lithium supply chain in North America. The company recently signed a deal with WesCEF to supply up to 85,000 tons of lithium hydroxide and lithium concentrate, which will be used to assemble batteries that comply with the Investment in Innovation and Infrastructure (IRA) guidelines. These developments show the growing importance of secure and sustainable battery supply chains in the EV industry.
Overall, the electrode supply deal between Tesla and LGES represents a significant investment in the future of EV production. By securing a stable supply of key battery components, Tesla is taking steps to solidify its position as a leader in the electric vehicle market. The partnership with LGES showcases the importance of collaboration and innovation in building a sustainable and environmentally friendly transportation industry. As Tesla continues to expand its in-house battery production capabilities, the company is poised to further accelerate the transition to electric vehicles on a global scale.
