Tesla Motors is in talks with LG Chem, Samsung SDI, and SK Innovation about battery sourcing for its Model 3 and to diversify beyond Panasonic.

Japan’s Panasonic has been the exclusive battery partner with Tesla. Tesla is talking to Korean battery makers LG Chem, Samsung SDI, and SK Innovation to diversify its battery-sourcing channels beyond Panasonic, according to coverage in The Korea Times.

LG Chem may be winning the contract with Tesla due to its output commitment, competitive pricing, and on-time delivery. Tesla has already been talking to the company through the LG Display division and its OLED dashboard panel screens. LG Chem had previously supplied batteries for the Tesla Roadster, though the volume shipped has been small.

“Tesla intends to use more Korean technology on its Model 3,” said a source familiar with the matter. “It decided to use tires manufactured by Hankook Tire and LG Display will possibly be supplying its OLED panels for the automotive systems. Additionally, Tesla is testing the manufacturing capability and production of LG Chem, Samsung SDI and SK Innovation.”

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Tesla executives recently visited key research centers at LG Chem, Samsung SDI, and SK Innovation. LG Chem and Samsung SDI declined to comment on working with Tesla, and SK Innovation wasn’t available for comment.

Panasonic has provided small-sized rounded batteries to Tesla, which have been more economic and easier to mass produce. LG Chem and Samsung SDI are also manufacturing round batteries.

While LG offers a pouch-type battery and Samsung-SDI a rectangular-shaped battery as their mainstream products, Tesla is looking at these mainstream technologies as options. It’s expected that the supply of batteries for the Model 3 will remain tight, and Tesla wants to build adequate inventory levels.

The Korea Times