Tesla will reportedly contract LG to supply batteries for vehicles built at its Shanghai plant.
The deal would diversify Tesla’s battery suppliers, as the company currently sources batteries from Panasonic.
Reuters, citing sources close to the deal, reported that Tesla is still likely to use Panasonic batteries in the initial phase of production and source from other suppliers in the future.
Tesla’s Shanghai operation will produce Model 3 and Model Y cars, including battery modules and packs. Tesla Chief Executive Elon Musk said in November that the company would source batteries from other suppliers.
Tesla’s Gigafactory 3 in Shanghai has been constructed at an impressive pace and is expected to start operations by the end of the year.
Tesla and LG did not immediately respond to Reuters’ request for comment.
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