Tesla May Need to Come Around to Order Lishen's Batteries Amid Limited Options
Xu Wei
DATE:  Jan 23 2019
/ SOURCE:  yicai
Tesla May Need to Come Around to Order Lishen's Batteries Amid Limited Options Tesla May Need to Come Around to Order Lishen's Batteries Amid Limited Options

(Yicai Global) Jan. 23 -- Tesla has  denied that it will use Chinese Lishen Battery Joint-Stock's products  for its first cars that will be made in China, but it's options are few  and far between. 

Lishen is one of the only few companies  in the country that mass-produces the exact types of battery storage  units, the highly powerful 21700 cells, that Tesla needs, Chinese  Caijing Magazine reported. 

Hefei's Guoxuan High-Tech Power Energy, which makes cylindrical lithium-ion batteries, has said it does not plan to produce 21700-type cells.  Shenzhen's BAK Battery and Far East First New Energy have started mass  production of 21700s in the second half of last year.

Reuters reported yesterday that the Palo  Alto-based carmaker penned a preliminary agreement with Lishen for the  latter to supply batteries for its first overseas factory in Shanghai in  order to diminish reliance on Japan's Panasonic. Tesla received  Lishen's tender but did not proceed with a contract, it said to Caijing.  An employee at the Tianjin-based bidder also said that no cooperation  deal between the two parties was reached. 

Batteries are one of the most crucial  parts that determine the pricing of NEVs. Tesla needs to lower its  prices if it want to expand in the Chinese market, Caijing's report  said, adding that local suppliers are a premise of reducing costs. Tesla  aims to churn out 500,000 cars in its China factory each year, while  the firm sold only half of that globally last year. 

Despite  Tesla's three price decreases in China late last year, it will still  have to fight for a larger footing in the biggest global NEV market that  is also fiercely competitive. The prices of all its models were dropped  up to 26 percent last November. Later, the price of Model 3 Long Range  All-Wheel Drive was slashed by 7.6 percent to CNY499,000 (USD73,528).

It is also unlikely that the firm will  make its own batteries from scratch in China. The new plant in  Shanghai's Lingang New City area may only be capable of assembling  battery packs and producing NEVs due to the city's strict environmental  standards to curb pollution, Caijing reported, citing people familiar  with the city's environmental policy. 

It is wise  to have multiple battery providers since market conditions like short  supply and price hikes can trouble car firms, a manager of a large  Chinese lithium battery maker said. 

Editor: Emmi Laine 

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Keywords:   Tesla,Lishen,Battery,NEV,Shanghai