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Tesla’s path to becoming a battery supplier is being paved by rivals’ cell supply problems

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Tesla’s potential as a future battery provider for automakers is being paved by this firm rivals’ struggles today. This notion is becoming more and more viable as increasingly more veteran automakers encounter challenges in their respective electric car apps. 

Assembling electric cars is not an simple task. As evidenced by the issues plaguing the rollout of this mass-market Volkswagen ID.3, which makes great electric vehicles is not only an issue of stuffing an electrical motor and batteries in an current platform for a internal combustion automobile. Making EVs, especially great, high-performing ones such as the Tesla Model 3, also requires control of a different set of abilities, for example software management and battery optimizations.

The latter is where a vast divide exists between Tesla and heritage automakers. Tesla uses its proprietary battery technology for its own vehicles. The 2170 cells because of its Model 3 car are being generated in Giga Nevada, a factory that’s poised to grow into among the biggest on earth by footprint after it’s s finished. Veteran automakers, on the other hand, rely on providers like LG Chem to supply their EVs’ batteries. 

Tesla’s 2170 battery cells. (Credit: Tesla)

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LG Chem supplies cells to several automakers, including Audi and Jaguar, whose e-tron and I-PACE equally use the firm ’s batteries. Rivian, that uses 2170 cells for its R1T pickup along with the R1S SUV, source their cells from the South Korean company also. More recently, even startup Lucid Motors, which is reportedly on the cusp of releasing its first vehicle, the Air, also announced it could be sourcing cells from LG Chem. This is wonderful for LG Chem, as it strengthens capabilities and the quality of its batteries, but it also does not bode well for all the firms appearing to acquire sufficient battery supply due to their cars. 

Since it is, LG Chem seems to be having problems meeting the need for its vehicles . Shortages of cells from the battery manufacturer have reportedly become the cause for the current halts in the Audi e-tron along with the Jaguar I-PACE’s generation . And that is just with premium-priced, mid-volume SUVs. When high-volume cars enter the marketplace, like the Volkswagen ID.3 (which also gets some of its own cells from LG Chem), the South Korean company will likely find it more challenging to supply batteries to each of its clientele. 

This supply issue could turn into a significant challenge to the electrical automobile revolution. With this in mind, as well as even more cars coming in the next few years, a need for another battery provider emerges. This is where Tesla comes in. Tesla was expanding its business to focus on building electric cars, according to the firm ’s battery and energy storage businesses. Considering Tesla’s experience in building EVs, in addition to the industry-leading quality of its batteries, the company might very well be poised to turn into one of those leading providers of tissues for other electrical car manufacturers. 

Interestingly enough, CEO Elon Musk has said the possibility of Tesla serving as a provider of powertrains and batteries to other automakers previously. This was explained by Musk himself during the Q3 2019 earnings call. “It could be in accord with the assignment of Tesla to assist automobile companies with vehicles on the battery along with powertrain front, perhaps on different fronts. Therefore it’s something we re open . We’re open to providing vehicles and powertrains and possibly other things ” he said, to other automobile firms.

Fiat-Chrysler CEO Steve Manley suggested the idea in a Q&A session. Talking about the firm ’s vehicle plan, Manley said that Fiat-Chrysler will likely be purchasing electric automobile components from the Silicon Valley-based company. “It might be wrong of me to say no more,” Manley stated , adding batteries and drivetrains will likely be one of the components that FCA will be purchasing from Tesla. The CEO also voiced the possibility of FCA acquiring a “skateboard” system out of Tesla, that it would use for its vehicles.

Tesla is now at a stage where its lead in the electrical automobile space is incontrovertible. The company is also in a stage where its production systems are more refined than before. Tesla may thus be reaching a stage where it’s large and powerful enough to support different automakers that are embracing electric automobiles. As veteran carmakers transition to EVs, people who will procure battery supply in Tesla will likely be those who will endure what could very well be a painful and costly move towards adulthood. 

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