President Kwon Young-soo of LG Chemical Co.

LG Chemical signed a deal with Tesla Motors Inc. to supply batteries to its Roadster, an electric car that Tesla Motors launched in 2010. The production of the Roadster ceased in 2012, but Tesla is in the middle of talks with the owners of the Roadster to change their batteries for $29,000.

LG Chem would have a chance to supply its batteries to other Tesla cars after supplying the batteries to the Roadsters.

Tesla offered the original Roadster customers the option to upgrade their vehicle for $29,000, allowing them to replace their battery pack and receive several other improvements. The new battery pack boosts the range of the vehicle to around 400 miles, representing a 35% increase.

Prior to this deal, Tesla had only one known supplier for batteries  Japan’s Panasonic. Panasonic and Tesla are also co-developing a $5 billion battery factory outside of Reno, Nev. The Japanese firm also supplies cells for the Model S and the Model X SUV. This supply agreement makes Panasonic the largest lithium-ion battery maker for electric cars.

Panasonic sees the automotive business as a growth pillar, and the LG-Tesla deal could come as a major blow to the company as now it will have to face competition in serving its key customer. Panasonic is a global leader in automotive lithium-ion batteries with a 46 percent market share.

LG has been gaining traction as a battery producer as it makes use of high-quality materials, because of which its batteries last longer than others. For this reason, it has earned a good name among carmakers. General Motors obtains batteries for its Chevrolet Volt plug-in hybrid and for its Chevrolet Bolt, which is a fully electric car, from LG.

The Chevrolet Bolt is expected to cost around $30,000 and will reportedly have a range of 200 miles. It is twice the range of Nissan’s Leaf electric car, which has a starting price of $28,600. Ford, Audi and Renault are a few of the other big automakers LG has deals with. Nissan-Renault CEO Carlos Ghosn, who believes LG makes the best cells for electric cars, is evaluating whether he should use the company’s battery in forthcoming Nissan electric cars, according to the Wall Street Journal.

On Tuesday, Tesla shares closed down 2.28 percent at $210.35. Year to date, the stock is down by over 5 percent. 

As part of the development of clean energies to address problems such as global warming and the depletion of oil resources, the material development division and middle and large-size division of the Battery R&D Center are researching and developing high-capacity, high-power batteries.

The material development division is researching anode and cathode materials, separator, and electrolytes among others, based on various technical abilities including electrochemistry, organic/inorganic materials, metals, and polymers. 

“We are also developing next-generation high-capacity materials based on anode materials, non-graphite cathode materials with Ni:Co:Mn as the base, as well as separator and electrolytes that dramatically improve the safety of lithium-ion batteries,” the company said.  “The middle and large-size battery part has already commercialized batteries for electric bicycles and robot cleaners focused on long-time use of the product. Furthermore, based on our world’s best technical skills, we are developing high-power, high-energy batteries for hybrid electric vehicles (HEVs) and electric vehicles (EVs) together with global customers.”

LG Chem completed development and began mass production of Korea’s first lithium-ion batteries back in 1999. At the end of 2011, LG Chem was the world’s third-largest maker with an annual production capacity of 1,000 million cells. It is also a supplier of automotive battery for electric vehicles. 

LG Chem Michigan is a wholly owned subsidiary of LG Chem based in Holland, Michigan, which operates a plant to manufacture advanced battery cells for electric vehicles in Holland, Michigan. The $303 million Holland plant received 50% of its funding from U.S. Department of Energy matching stimulus funds, and started manufacturing battery systems in 2013. The plant can produce enough cells per year to build between 50,000 and 200,000 battery packs for electric cars and hybrids such as the Chevrolet Volt by General Motors, the Ford Focus Electric, and upcoming plug-in electric vehicles from other carmakers. Its research and development arm, called LG Chem Power, is based in nearby Troy, Michigan.

A view of LG Chemical Lab technicians at work on battery cells.(Photos:LG Chem)