Does Tesla Need This Deal With a New Battery Supplier?
Among the many challenges facing emerging automakers, establishing a reputation for high safety standards may top the list. Electric vehicle maker Tesla (NASDAQ:TSLA) appeared to have this problem solved with its excellent crash test performance and lack of consumer complaints. However, as reports of a Model S battery fire flood media outlets, Tesla may have to close a pending deal with battery supplier Samsung SDI.
Reuters reports Tesla has been in talks with the Korean battery supplier, which is a separately traded unit of Samsung Electronics (SSNLF.PK). According the Friday report, the two have been in discussions over supplying the electric automaker with battery technology for its upcoming vehicles. Sources have given varying accounts of how close the two parties are on closing a deal.
Samsung SDI may have significant leverage in the transaction, since Tesla CEO Elon Musk has publicly said the automaker needs more suppliers for batteries, a need that will grow as the automaker tries to increase production volumes and unveil a more affordable model for consumers. The lithium ion batteries currently in use in the Tesla models are produced by Panasonic Corp. (PCRFY.PK) That includes the one that caught fire recently in a Model S.