SEOUL (Reuters) – Shares in two battery suppliers to Tesla , South Korea’s LG Chem and Japan’s Panasonic, fell on Wednesday after the electric car maker unveiled plans to cut costs and produce its own batteries.
LG Chem was trading down 3.1%, after initially opening higher, while Panasonic fell 4%.
Tesla CEO Elon on Tuesday outlined plans for aggressive cuts in manufacturing costs, although the automaker’s shares tumbled as Musk forecast the change could take three years or more.
To help drive down vehicle costs, Musk described a new generation of batteries that will be more powerful, longer lasting and half as expensive than the company’s current cells at Tesla’s “Battery Day”.
Tesla aims to rapidly ramp up battery production over the next years, to 3 terawatt-hours a year, or 3,000 gigawatt-hours — roughly 85 times greater than the capacity of its Nevada plant. Musk said Tesla could supply batteries to other companies.
Tesla said the company has started ramping up production of its new batteries at a pilot line in largest vehicle factory in Fremont, California, but productivity is not high at this point.
Tesla currently produces batteries in partnership with Panasonic at its $5 billion Nevada factory, while LG Chem and China’s CATL supply cells to its Shanghai factory.
Reporting by Hyunjoo Jin, Cynthia Kim; Editing by Richard Pullin