Got an order for all Tesla Model Y batteries produced by LG Chem in China

Tesla Model Y

LG Chem has won orders for all batteries for the Tesla Model Y, an electric vehicle produced in China next year. They beat CATL in China and Panasonic in Japan, which were considered strong rivals. Korea is assessed as having won the ‘battery war’ between Korea, China and Japan again.

Prove once again the technology gap

According to the industry, on the 20th, LG Chem recently signed a contract with Tesla, an electric vehicle company in the United States, to supply batteries for the Model Y produced at the Shanghai plant in China from the beginning of next year.

Dubbed ‘Musk’s Big Job’, the Model Y sport utility vehicle (SUV) is the second product Tesla produces at its Shanghai plant after the popular Model 3 electric vehicle. The Model Y is known to be equipped with an NCM (Nickel Cobalt Manganese) cylindrical battery produced at LG Chem’s Nanjing, China plant.

This is the second time that LG Chem batteries have been used in Tesla electric vehicles after the China-made Model 3. Currently, Chinese CATL supplies batteries for the low-end Model 3 and LG Chem for the high-end Model 3.

Meanwhile, in the industry, it has been observed that LG Chem, CATL and Panasonic will win separate orders for Model Y batteries, but it was concluded that LG Chem will supply them all. A battery industry official explained: “With CATL’s flagship LFP (Lithium Iron Phosphate) battery, it is difficult to handle the weight and performance of a high-end vehicle, the Model Y.” .

With this order, LG Chem’s share in China, the world’s largest electric vehicle market, is expected to increase significantly. China’s Tianfeng Securities said: “Tesla’s sales in the Chinese market next year are expected to be 880,000 units, 76% more than this year,” and predicted that “Model Y sales will reach 360,000 units.”

The two companies did not disclose the specific size of the contract. Based on the expected sales volume next year, LG Chem’s Model Y battery orders are expected to reach at least 3 trillion won per year.

Tesla Model 3

Tesla chooses performance over price

Tesla recently began receiving reservations for the Y’Long Range Model ‘and the’ Performance Model ‘through the official website. The price is expected to be between 488,000 and 535,000 yuan (about 82 million to 91 million won). The Model Y is Tesla’s first SUV model. The company started mass production at the Fremont plant in California, USA, in the first quarter of last year and, starting in the first quarter of next year, it will also start production at the Giga Factory in Shanghai, China. .

Analysis says that Tesla’s decision to use LG Chem’s battery to install it in the Model Y is the result of focusing on performance. Model Y has an empty vehicle weight of approximately 2 tons, which is 25% heavier than Model 3 (approximately 1.6 tons).

Although the price is relatively inexpensive, there are many evaluations that it is not easy to handle with CATL LFP (Lithium Iron Phosphate) batteries, which have little power and autonomy due to their low energy density.

It means that Tesla chose the ‘LG battery’ with advanced performance to ensure the quality of the Model Y, which is about 1.5 times more expensive than the Model 3. A battery industry official said: “LG Chemical has established a trusting relationship with Tesla by supplying it to the high-end Model 3, “and said,” As there is a factory in Nanjing, China, near Shanghai, we will be able to supply the quantity without problems.

Like LG Chem, CATL also produces some NCM (Nickel, Cobalt, Manganese) batteries. However, the industry analysis is that the technology gap is still significant. Although it has not been properly disclosed due to Chinese media control, it is known that fire accidents occurred recently in a car with CATL’s NCM battery.

LG Chem to solidify the world’s No. 1

The Chinese battery industry was in shock. This is because the Chinese government tried to support by writing an exclusive policy of subsidizing only electric vehicles equipped with batteries produced by its own companies, but it was rejected by LG Chem technology.

With this order, LG Chem’s market share in China is expected to increase significantly next year. In the Chinese market for batteries for electric vehicles, CATL (48.3% in the first half of this year) and BYD (14.0%) dominate. LG Chem, which has been supplying batteries to the Chinese-made Tesla Model 3 since the end of last year, ranks third with a 9.5% market share. If the Model Y delivery is added, it could overtake BYD and jump to second place in the Chinese market after CATL.

If LG Chem increases its market share in China, the world’s largest electric vehicle market, which was relatively lower, its position as ‘world number one’ is expected to further strengthen. According to market research firm SNE Research, at the end of September this year, LG Chem’s global market share for electric vehicle batteries was 24.6%, and it is in a fierce battle with CALT (23, 7%) and Panasonic (19.5%).

Additional orders for batteries for Tesla electric vehicles are also expected. Elon Musk, CEO of Tesla, announced at ‘Battery Day’ in September that he will focus on the ‘High Nickel Battery’, which has increased the content of nickel cathode material. LG Chem is considered the most advanced company in the development of high nickel content batteries.

LG Chem aims to increase battery sales, estimated to be around 13 trillion won this year, to 30 trillion won in 2024. Battery production capacity also decided to expand from 100 GW (gigawatts) by the end of this year. to more than 260 GW by 2023. An LG Chem official said: “It is the only company in the world that has established production bases in the three regions of the US, China and Europe.” “We will dominate the global market with advanced technology.”

Reporter Mansoo Choi [email protected]