DETROIT/SEOUL Oct 4 Popular electric carmaker
Tesla Motors Inc may name South Korean battery
producer Samsung SDI Co Ltd as an additional
supplier as the California auto upstart tries to add more models
and expand, although at least one source familiar with the
discussions described the deal as being far from done.
Both Tesla and Samsung SDI, a unit of Samsung Electronics Co
Ltd, on Friday confirmed that the two companies are
in talks about the South Korean company supplying battery
technology to Tesla, the maker of the best-selling U.S. electric
car, the premium Model S sedan with a price tag of $70,000.
The pending deal highlights Tesla's confidence in the future
of all-electric battery cars, even as some doubters predict
all-electric cars are likely to remain a niche in the broader,
global automotive market in search for clearer and more
fuel-efficient technology. Some of those doubters see fuel-cell
cars as a more promising alternative to gasoline-fueled cars.
Kim Sang-eun, a Seoul-based spokesman for Samsung SDI,
declined to provide details because the talks are on-going.
"Nothing has been decided," Kim said.
Tesla's Palo Alto based spokeswoman, Liz Jarvis-Shean, also
confirmed the two firms were in discussions but noted that Tesla
was in talks with other battery suppliers as well. "We
continually evaluate best (battery) cells and technologies from
all manufacturers," Jarvis-Shean said. She did not elaborate.
Two individuals privy to details of the discussions between
the two companies, however, described the talks as being in
their final stage. They said the two companies are trying to
work out certain remaining kinks in the pending contract for
Samsung SDI to provide battery technology for the Model X, a
more affordable electric car model Tesla is expected to add to
its product offerings in 2014.
One of the sources, who is close to Samsung SDI, said the
discussions are "90 percent complete." He said Tesla and Samsung
SDI have not been able to close the deal mainly because of
Samsung SDI's insistence that Tesla, as part of the deal, buy
other components including touch-screens from Samsung Group.
No financial details of the deal are available, but one of
the sources said "SDI management thinks it is good for improving
the company's image and ultimately helps them in doing more
According to the other sources, Tesla and Samsung SDI have
already finished testing Samsung SDI's battery technology. He
also described the supply deal to be "close" to being finalized.
Still, a third source familiar with the discussions disputed
the assertion the two companies are close to sealing the deal,
saying Samsung SDI's technology is not "as yet" competitive with
battery cells made by Panasonic Corp, Tesla's primary
battery cell supplier. The description of talks being in the
final stage is "not accurate," the third source said.
The news came as shares in Samsung SDI fell as much as 3.7
percent on Friday, after a video of a burning Tesla electric car
sent the U.S. firm's shares plunging overnight. U.S. emergency
officials said the fire occurred in the electric vehicle's
lithium-ion battery, the latest in a string of problems for the
batteries, which are widely used in electric vehicles sold by
For Tesla, the deal is almost a must since it only has one
primary supplier of battery technology, Japan's Panasonic, for
the Model S, which is its sole product offering until next year
when it is expected to start selling an additional model called
the Model X.
Tesla officials believe the company needs to diversify its
supply chain to foster competition among makers of key
components and to ensure Tesla has a stable supply of parts.
Samsung SDI already supplies battery technology for BMW's i3
electric car, according to the Samsung SDI spokesman. Samsung
Group, which sees slowing sales in smartphones, has been trying
to position electric batteries as an area ripe for growth,
according to group officials.
The sources said Samsung SDI, as part of the deal, is aiming
to supply Tesla with small batteries similar to those used in
laptop computers. Tesla uses several thousands of those
batteries in beefy battery packs to power its all-electric cars.
The sources said Samsung SDI would start supplying Tesla
beginning with the Model X. The South Korean company is also
talking with Tesla about another future product due for a launch