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Tesla (TSLA) stock has skyrocketed in the past few weeks after it released its Q2 2020 production and delivery report. One of Tesla’s battery suppliers, LG Chem (051910.KS), has been skyrocketing as well and now holds the largest market share in the battery EV industry.
According to Nikkei Asian Review, LG Chem’s stocks have gained about 60% since the beginning of the year. According to its growth chart, LG Chem has grown at least 67.24%. TSLA has grown significantly as well, gaining 298.61% year-to-date.
“They say second-quarter earnings will beat the market estimates, basically,” said Heejin Kim from Bloomberg. “And it’s because LG will generate the highest quarterly profit for the second quarter mainly because of its EV battery business…and its market share—I just said—in the EV battery industry rose to almost 25 percent in the world.”
Some have attributed LG Chem’s gains to its partnership with Tesla. Earlier this year, Tesla announced its partnership with LG Chem and CATL for its battery supply chain in Giga Shanghai. The notion that LG Chem’s rise as an EV battery supplier could be linked to its partnership with Tesla has not been proven.
However, CATL and Panasonic hold the second and third-most market share in the EV battery supply industry at 22.3% and 21.4%, respectively. So now Tesla has partnered with the top three battery suppliers in the battery supply industry.
The battery supply industry could shift after Tesla Battery Day which is tentatively scheduled for September. Tesla has already started working on its pilot battery production line in the Fremont factory, codenamed the Roadrunner Project.
LG Chem will not be idling standing by either. It plans to increase its battery capacity up to 120GWh by next year. The Korean battery supplier will be supplying batteries cells to European automakers as well as Tesla. According to Bloomberg’s Heejin Kim, LG Chem “is now holding more than 120 billion dollars of order for its EV battery.”
Battery capacity will greatly affect the auto industry’s transition to all-electric vehicles. Vivas Kumar from Benchmark Mineral Intelligence discussed the importance of battery supply chains and its role in an EV-dominated world while on ARK Invest’s FYI Podcast.
“A robust electric vehicle industry, a robust lithium-ion battery industry, is not just about the automotive OEM. It’s about bringing the entire supply chain on board because any bottleneck or any sort of geopolitical issue that pop up in the supply chain will compromise the end goal of getting millions of electric vehicles on the road,” Kumar said.
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Ma. Claribelle Deveza holds zero shares of Tesla, Inc., and currently (at the time of this article's publishing) holds zero options or securities in Tesla Inc. and/or its affiliates.