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Tesla Scrambles to Secure Battery Supplies amid Soaring Sales

August 25, 2013 by Jeff Shepard

In its latest report, the California New Car Dealers Association, found that the Model S from Tesla Motors, Inc. is among the top five selling models in the luxury and sports-car segment in the state through June of this year. It came in at number three with 4,714 registrations, behind the Mercedes E-Class and BMW 5-Series and beating out the Lexus GS and Audi A6. At the same time, Tesla is speeding development of its next vehicle, the Model X crossover, as well as a right-hand drive version of the Model S in the second half of this year. The Model X is expected to go on sale next year.

This success has put strains on the company’s battery supplies, with a potential for corresponding price increases for its EVs, as the cost of the batteries rises. According to industry reports, Tesla’s current battery supplier, Panasonic is making a major investment to increase its production capacity and the Korea Herald reports that Samsung SDI is working to sign its first battery supply contract with Tesla. In addition to Panasonic and Samsung SDI, LG Chem and BYD Company are racing to develop batteries for Tesla. According to the Korea Herald report, Samsung SDI is in the final stage of signing a contract with Tesla to supply lithium ion batteries for the electric carmaker.

“We understand SDI and Tesla are undergoing last-minute tests before the Korean company starts to supply its batteries,” said the report in the Herald. Final steps before the contract is inked include testing the battery life, which will be conducted by Samsung SDI, coupled with driving and safety tests, which are to be carried out jointly by SDI and Tesla.

Panasonic will expand its lithium-ion battery business, which last year added to a near-record net loss but is now contributing to a turnaround strategy targeting the auto sector, according to a report in the Times of India. The company will invest about $200 million to boost production of both small and large lithium-ion batteries for automakers. It plans to build an additional production line for small batteries at a facility in the Osaka area in western Japan, and re-start another line at a separate Osaka plant. It is also constructing a new production line at its Kasai factory, also in western Japan, to build larger lithium-ion batteries. Operations are scheduled to begin there next spring, the report concluded.