Following Tesla’s unveiling of its plans to produce its own batteries in order to trim costs, shares of its two battery suppliers fell on Wednesday. Shares of South Korea’s LG Chem and Japan’s Panasonic have fallen with the news reaching the market.
After initially opening higher, LG Chem’s shares was trading down by 3.1% while Panasonic’s shares fell by 4%.
On Tuesday, Tesla’s CEO Elon Musk outlined plans for aggressive manufacturing cost cuts. Tesla’s shares also fell after Musk disclosed that it could take three years or more years for the plan to take effect.
In order to bring down manufacturing costs, Musk described a new generation of batteries which will be more powerful, longer lasting and half as expensive than current costs.
Musk unveiled Tesla’s plans on “Battery Day”.
The carmaker aims to rapidly ramp up the production of batteries to 3 terawatt-hours a year, or 3,000 gigawatt-hours; this is around 85 times greater than Tesla’s current capacity at its Nevada plant.
Musk also mentioned that Tesla could supply batteries to other companies.
Although Tesla has begun ramping up the production of its new batteries at a pilot line at its largest vehicle plant in Fremont, California, productivity is moving up and is not high at this point.
Currently, Tesla produces batteries in partnership with Panasonic at its $5 billion Nevada factory; LG Chem and China’s CATL supplies battery cells to Tesla for its Shanghai factory.
