Now the Korea Times, a South Korean-based outlet like LG, reports that Tesla is interested in acquiring a stake in the future battery company:
“Tesla is looking to acquire a stake in LG Energy Solution, soon to be separated by LG Chem, to secure a stable supply of batteries, banking industry sources told the Korea Times on Monday. “
However, the report gives the impression that talks are very early.
“Tesla is looking to acquire a stake in LG Energy Solution. Specifically, Tesla is reportedly considering taking up to 10% stake in LG Energy Solution, ”a source said on condition of anonymity, as he was not authorized to speak officially to the media.
While another source suggested it was too early to tell:
“It’s early enough to tell if Tesla has a real plan to acquire a stake in LG Energy Solution. But given Tesla’s growing attempts to cut costs and round-battery production moves, it makes sense for Tesla to explore an opportunity to buy a stake in LG Energy Solution, ”added another source familiar with the issue.
Tesla has long had a battery cell supply with Panasonic, but it started expanding its battery cell supply chain a few years ago.
It first added LG Chem as a supplier of energy storage products and more recently the company has become a larger partner to supply cells for the production of Tesla Model 3 in China.
Last week, Tesla officially announced its intention to produce its own production of battery cells, but it was also clear that it would continue to purchase more battery cells from suppliers for the foreseeable future.
This report is surprising for several reasons.
First of all, it’s unusual for Tesla to acquire a minority stake in a company.
In previous acquisitions, the automaker has sought to take control of the companies and acquire all of the companies, which then became subsidiaries of Tesla, like Maxwell, Hibar, and even larger acquisitions like SolarCity.
The latter shows that Tesla is not opposed to larger acquisitions, but even a 10% stake in LG’s battery business will likely be more expensive than the acquisition of SolarCity.
Tesla has a fairly comfortable cash position at the moment and could close the deal with stocks as well, but it would be a surprisingly big move for the company.
In addition, LG is already linked with several other automakers, including a partnership with GM. I’m not sure Tesla would be welcome there.
I would take this report with a grain of salt for now.
What do you think? Let us know in the comment section below.
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