LG Energy Solution has been progressing in the development of the 46800 battery.
As Panasonic, its main competitor, delayed the mass production of the new battery, LGES is expected to enter volume production first. The industry is watching whether the South Korean battery maker can increase its supplies to Tesla accordingly.
According to South Korea-based ET News, Panasonic's financial report shows that the company plans to begin volume production of the 46800 battery at its plant in Wakayama, Japan, between July and September 2024 to supply Tesla. The new battery, which will also enter production in the US, offers five times more energy density than Panasonic's 21700 battery.
Panasonic initially aimed to begin manufacturing 46800 batteries in 2023 but later delayed the plan until 2024. Nikkei Asia reported that the battery maker will start volume production in September. Since LGES plans to start 46800 battery production at its factory in Okcheon, South Korea, in August this year, it will likely begin supplying the battery one month earlier than Panasonic if Nikkei Asia's prediction is correct.
As Tesla starts to adopt the 46800 battery, General Motors, BMW and Volvo have followed suit. The new-generation cylindrical battery has become the center of the EV market. The competition between Panasonic and LGES in mass production timing and yield rate has attracted the market's attention because the 46800 battery requires more advanced technology.
Sources said LGES' 46800 batteries will first power Tesla Cybertrucks. Tesla has also tried to secure cylindrical battery supplies from the South Korean manufacturer as it plans to introduce its Robotaxi to the market in August 2024.
Will Tesla's battery ramp-up impact LGES?
Some analysis said Tesla's effort in battery development will affect the order it places with LGES. The Korea Economic Daily previously reported that LGES is working with Tesla on details about a KRW6 trillion (US$4.38 billion) supply agreement for electrodes.
The news outlet reported that LGES and Tesla plans to sign the deal in the second half of 2024, with the supply beginning in 2025. The total supplies were estimated to support 1.3 million to 1.4 million EVs, approximately 70% of Tesla's production of 1.84 million units last year.
The agreement would benefit LGES' importance among major customers' supply chains and help the battery maker consume inventory. However, some analysts said if Tesla continues to increase battery production, the company will reduce battery contract manufacturing needs, impacting LGES' mid-to-long-term development.
Tesla CEO Elon Musk has said the company mass-produces the 46800 battery in case its suppliers face production disruption. There was a time when primary automakers placed substantial battery orders, prompting battery prices to skyrocket. If carmakers can produce their batteries, they can better handle challenges.
Sources related to LGES said the company is discussing 46800 battery supply and contracts with customers. As for rumors regarding offering electrodes to Tesla, sources said they cannot talk about information related to its customers.
