Will Tesla Look to its Biggest Competitor for New Battery Tech?

It’s hard to imagine Tesla working alongside its biggest rival in battery technology, but it seems they want to keep their friends close and their enemies on the payroll.

For a little bit of context, the battery market is only just beginning to flourish, something we have talked about lots in the past month. More importantly, Australia has already been pinned as the early adopters of energy storage technology.

This apparent gold rush has sprung a number of interesting and perhaps surprising competitors. For example, Tesla Motors, primarily a vehicle manufacturer shocked the world when it released the Tesla Powerwall, a slick new home battery system that opened the world's eyes to energy storage.

Another, an even more unexpected competitor gaining a lot of notoriety is LG Chem, a little-known offshoot of the LG Corporation. Other than developing energy storage solutions – as they like to call it – they operate primarily as a chemical and materials manufacturer, as the name suggests.

So just to recap, the two largest competitors in the Australian battery market consist of a luxury car company, run by an eccentric Silicon Valley billionaire and a chemicals manufacturer operating under a South Korean conglomerate known for home appliances and ‘Life’s Good’.

Which brings us to the strangest part of this story.

It looks like Tesla is not only considering making a deal with LG Chem to supply batteries for the Model 3 (more on that in a minute), Tesla’s most ambitious project yet, but LG Chem has actually supplied technology to Tesla in the past.

A while back Tesla announced it would be offering upgrades to its first production vehicle, the Roadster. What it didn’t announce is that for the first time Tesla would source its battery technology from LG Chem, instead of Panasonic alone.

Both companies are now in talks along with Samsung, and SK Innovation about providing batteries to the Gigafactory to assist with the huge production goal of 500,000 Model 3 vehicles per year. Interestingly, LG Display, another affiliate of LG Corp is producing the OLED for the Model 3 as well.

LG Chem isn’t a small time player either, in case the fact that it was wasn’t a stand-alone company made you think so. LG Chem provided battery technology for the Nissan Leaf and will also provide the same tech to Chevrolet, Renault, Ford and Audi.

Put it this way, Tesla has become vertically integrated company with one brand and one product line, similar to Apple. LG Chem, on the other hand, provides its core technology to a number of manufacturers who repackage it and sell it under their brand, like Microsoft did with Windows.

This gives LG Chem the advantage of selling to multiple companies without with the sole task of simply improving its technology.

This is possibly the reason that has led many automotive manufacturers to come out saying LG Chem actually has the superior battery technology, some even choosing LG over their own technology.

Nissan CEO Carlos Ghosn said:

“We have opened to competition, our battery business, in order to make sure we have the best batteries. For the moment, we consider that the best battery maker [to be] LG.”

As more and more electric vehicles pop up, many choosing LG Chem to supply the batteries, Tesla might have something a problem on their hands.

Although some could say that in a lot of areas the companies aren’t direct competitors. For example, LG Chem doesn’t produce vehicles and Tesla doesn’t manufacture petrochemicals.

In fact, when it comes to Tesla’s main business, it does makes some sense to bolster their supply with a quality battery supplier to ensure they deliver on their promises to the public.

It get’s interesting, when we are on the verge of a home battery boom and the two biggest contenders, LG and Tesla, are sharing technology in other areas of their business. We know how badly Tesla want’s to be the all-in-one solution, however, LG Chem is understatedly securing its position in the Australian energy storage market as well.

Changhwan Choi, LG Chem’s Australian Business Manager put it this way, “We see a quiet solar revolution brewing and we strongly believe that LG Chem will be at the forefront of this transformation to help unlock the true value of solar storage and better enable the ecosystem.”

Chou went on to say LG isn’t much worried about competition. So far, LG Chem hasn’t shown much reason to worry either.

In a previous article, we talked about how LG Chem actually offers the most efficient batteries on the market and at the lowest price. We concede that LG hasn’t produced something with the elegant curves of a Tesla Powerwall, but it depends on how much you are willing to pay for style.

While the media continues to pump out Tesla evangelism, for a number of reasons including price, efficiency, and support many informed consumers are choosing LG Chem over Tesla when it comes putting pen to paper.

The biggest kicker for Australian homeowners being that LG Chem will only void a warranty if the ambient temperature hits 50 degrees celsius. To put this in context Australia has formally recorded only three days of 50-degree heat since 1910.

Tesla, on the other hand, will void your warrant if the mean temperature recorded is 30 degrees celsius which excludes the top end, many inland residents and even much of Upper North Queensland.

For the rest of us, it depends on where and when you bought a Powerball. Our condolences go out to anyone who purchased one during a South Australian summer and needed a replacement shortly after.

Solar Ebook Mehrtz

We aren't counting Tesla out, given their reputation to pull through at the last minute. However, there's no denying that LG Chem has the better offer right now, but in contrast, there's no denying the ‘Tesla Hype Machine’.

And, while some might think Elon Musk’s brainchild is the Hoover of home batteries if things keep going the way they are Tesla may not become the industry leader everyone expected it to be, all thanks to a chemicals company out of South Korea.

A company who’s website puts ‘ESS technology’ third in its list of products, coming after petrochemicals, LCD polarizers and OLEDs. A company who’s marketing consists of one annual print advertisement and a bi-annual promotional video.

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