SEOUL/SHANGHAI, Sept 23 (Reuters) - Shares of Asian battery
suppliers fell on Wednesday after Tesla Inc outlined a
plan to halve the cost of its electric vehicle batteries and
bring more production of the key auto component in-house.
The fortunes of battery makers in South Korea, Japan and
China are linked to Tesla, the EV market leader, as they supply
its factories in Nevada and Shanghai.
Tesla CEO Elon Musk said on Tuesday the carmaker aims to
lower electric vehicle prices to $25,000 each by producing new
batteries with cheaper costs and longer range.
Musk said that it will take about three years to fully
achieve this goal-- disappointing investors and wiping $50
billion off its market value -- but analysts said plans for in
house production would put pressure on suppliers to lower
"Tesla will have more power in negotiating prices and
therefore overall battery costs will fall further," said Rho
Woo-ho, an analyst at Meritz Securities.
Shares in South Korea's LG Chem finished 1.4%
lower after falling as much as 5.5% while Panasonic
ended down 3.7% and China's CATL was down 1.7%.
A Panasonic spokeswoman said the company is "considering a
variety of options" when asked if Panasonic would partner with
Tesla on new cell production, but added that nothing has been
determined at this time.
"We value our relationship with Tesla and look forward to
enhancing our partnership," the company said.
LG Chem declined to comment. A source familiar with the
company said it is open to cooperating with Tesla on the new
CATL said in a statement it also planned research and
investment in nickel rich chemistry, large cells and integrated
structure, which are part of Tesla's technology development
roadmap, and saw them as key factors in making electric vehicles
Tesla said it plans to achieve 100 gigawatt hours of
internal battery capacity in 2022 and 3,000 gigawatt hours by
2030 -- roughly 85 times greater than the capacity of its Nevada
plant by 2030.
"This 100 gigawatt hours are supplemental to what we buy
from suppliers," Musk said, reiterating that Tesla will continue
to use its existing cell suppliers.
Tesla currently produces batteries in partnership with
Panasonic at its Nevada factory, while LG Chem and CATL supply
cells to its Shanghai factory.
Tesla said it has started ramping up production of its new
batteries at a pilot line near its vehicle plant in Fremont,
California, but the production yield is not high.
"It is insanely difficult to scale up," Musk said at the
company's closely watched "Battery Day" presentation. "There is
a clear path to success but a ton of work to do," he said.
Experts had mixed responses over whether Tesla will be able
to live up to its aim of mass producing the bigger new
"Tesla's new batteries are possible at lab levels, but mass
production is impossible," said Cho Jae-phil, a professor at
Ulsan National Institute of Science and Technology who worked
previously at Korean battery maker, Samsung SDI.
However, South Korean battery expert and professor Park
Chul-wan was more optimistic.
"Once Tesla succeeds in mass-producing the new cells, other
battery vendors will find it difficult to catch up. It will be
difficult to imitate the technology," he said.
(Reporting by Hyunjoo Jin in Seout and Yilei Sun in Shanghai
and Timothy Kelly; Additional reporting by Heekyong Yang and
Cynthia Kim in Seoul; editing by Richard Pullin and Jason Neely)