Boston, MA 10/07/2013 (wallstreetpr) – All-electric carmaker Tesla Motors Inc (NASDAQ:TSLA) has entered a battery supply deal with Samsung SDI Co Ltd, a business unit of the South Korea-based Samsung Electronics. Reports indicate that the two companies have already reached “90 per cent of the deal”.
As TSLA positions itself as the leading manufacturer of electric cars, the company seeks to foster its supply chain, especially for its latest electric SUV, Model X which is due for official release next year. The car is expected to go for around $70,000.
TSLA already has another battery supplier, Panasonic, a Japanese battery technology company. Panasonic is TSLA’s primary battery supplier and it is responsible for powering of the Model S. Interestingly, Panasonic is also a shareholder in the popular electric carmaker.
The electric automaker is seeking a battery supply deal with a supply that can offer the “Panasonic standard” and this is why Samsung has become a viable candidate. But beyond supply, there is the aspect of diversification and global expansion. This explains why Panasonic doesn’t complain why another battery supplier is sought when it can meet the demand.
Being a partner in the business, efforts to enhance the efficacy of TSLA electric car models and increase their market demand is still in its best interest. Even so, analysts say that as things look up for TSLA, relying on Panasonic alone for battery supply might derail its progress.
While the deal with Samsung for the Model X battery supply is at the final stages according to reports emanating from the two companies, what is holding back the deal completion is the insistence by Samsung that besides battery, it should also supply the electric automaker with other components such as Samsung touch screens.
The kind of battery to be used in Model X will be more like what is used in laptops.
TSLA has a market cap of $21.98 billion and a year’s range of $194.50 high and $26.86 low.
