Tesla Signs Deal With New Battery Supplier

The auto car maker signed a deal with LG Chem which will be providing upgraded batteries for Roadster.

According to the most recent news about electric car makers Tesla Motors, it was reported that the auto making giant has recently collaborated with a Korean battery making company called LG Chem, and this deal between the two companies is believed to help the auto giant to give its battery business a huge boost. The company has upgraded its EV portfolio and has signed the deal following this event. Tesla cars are already receiving their batteries and battery cells from a variety of companies and in a press release, the giant further confirmed that the cells it will be receiving from LG Chem will be incorporated in its Roadster vehicle, and this one will particular be the 3.0 battery cell. Similarly, Panasonic also works in collaboration with the electric car makers and provides battery cells from the Model S cars. Presently the luxury car makers are working to build up the much talked about Gigafactory which will ensure the giant’s self-efficiency in the battery business. However, it is not a hidden factor that companies like Panasonic are also working with the company in the Gigafactory to provide for the Model 3 smart car which will be released sooner than later. It has been reported by multiple news sources that the first car of Tesla business, namely Roadster, has always been built with a 2.0 and 2.5 level battery but it has been manufactured in such a way that it can adapt to the higher efficiency of 3.0 battery packets that the LG Chem will now be supplying to the company. On the other hand, analysts have also pointed out that this collaboration with the Korean will not put down the relationship the giant has with Panasonic and it will maintain its position of being the most important supplier of batteries to the hybrid car manufacturer. LG Chem, on the other hand, has been involved in supplying battery cells to a couple of prominent auto makers in the industries like General Motors and has been carrying forward a strong business since a very long time. Analysts at the Navigant Consulting have released a report in which it has been stated that very soon the Korean battery providers will be competing for a target of 1GWH towards the end of the next year, which is an accomplishment to be considered. As for the electric vehicle maker, the giant has already been using batteries from LG Chem to support its previously launched sedans and also its new car Model X which it released only recently. 

Is Tesla Running Out Of Money?

Tesla has several futuristic plans that require cash, however, their current finances are not so satisfactory to make it all happen.

Tesla Motors Inc. is one of the most promising electric car makers that are disrupting the automotive industry at a relatively great pace. The company at this point of time is increasing the number of a project which is relatively more expensive that what it was doing earlier. The company wishes to reign in the electric vehicle industry along with the energy storage but for that they need a stable stream of revenues.

The problem which several analyst and skeptics are dealing with at the moment is that will Tesla be successful in breathing life to its dreams or be stuck due to limitations in funding. The company currently has a single electric car that is responsible to help them sail swiftly. According to a consensus, the company currently sales for a quarter across the globe are similar to one-day sales of General Motors Company in the United States.

So the question is where is Tesla spending all the hard earned money?

Tesla apart from coming up with a new SUV the previous year is also reportedly working towards unveiling “ high volume mass market electric car” which it will call Model 3 in FY17. So in order to have a Model 3 that is relatively cheaper, the company has decided to minimize costs of its batteries that will hinge the launch of the much anticipated Gigafactory plant in Nevada for storage batteries.

Apart from this the company seeks to expand its footprints in regions where it is not currently available, therefore, the company is working towards launching Model S in several international markets. For the same reason, the company is spending vast amounts of money to establish the necessary infrastructure required by the company for their electric cars. This includes servicer stations, supercharger networks etc.

This year the company has also vowed to pledge $1.5 billion in capital expenditure (CAPEX) almost 25 per cent of this budget was carry forward by Ford Motor Company- the second largest automotive firm that generates 200 times more money in terms of revenues when compared to Tesla Motors.

At this point, Tesla has made a vigorous investment in several “growth catalyst” at a time where they are already struggling with finances. This has brought negative criticism for them from several investors and analyst at Wall Street.

Hence, in a nutshell, Tesla needs to figure out what it really wants to do in the years to come. The company has extremely futuristic plans, but these plans require money for implementation which the company currently lacks.