Tesla Supplier LGES In Talks With EV Maker To Supply Batteries From Proposed Arizona Plant

Tesla Inc.’s (NASDAQ: TSLA) battery supplier LG Energy Solutions, or LGES, is reportedly planning to expand its relationship with the electric vehicle giant.

What Happened: LGES said it is in "active discussions" with Tesla and other EV startups for the supply of batteries from its proposed plant in Arizona, Reuters reported, citing comments by the South Korean company’s management on a conference call.

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The company currently supplies batteries for EVs rolling out of Tesla’s Giga Shanghai plant.

Why It’s Important: LGES is the second-ranked EV battery supplier in the North American market behind Japan’s Panasonic Holdings Corp. (OTC: PCRFY), according to SNE Research, Korean news outlet Maekyung Media Group reported.

Asian EV battery manufacturers have a near monopoly on the market, and their quest to set up manufacturing plants in the U.S. stems from the incentives provided under the “Inflation Reduction Act of 2022” for localizing manufacturing.

In mid-2022, LGES announced plans to set up a second battery manufacturing plant in the U.S., choosing Queen Creek, Arizona, as the location. The company was reportedly planning to manufacture cylindrical batteries at the proposed plant, with mass production planned to start in the second half of 2024.