Tesla Orders EV Battery Production Equipment From South Korea's Hanwha Group

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【Summary】Electric automaker Tesla is making preparations to expand its battery production capabilities to meet rising demand for its electric vehicles. South Korean business conglomerate Hanwha Group said this week that its subsidiary Hanwha Corp. recently signed a supply deal on battery production equipment with Tesla.

Eric Walz    May 05, 2020 11:50 AM PT
Tesla Orders EV Battery Production Equipment From South Korea's Hanwha Group
Tesla Model 3 battery cells in production at the automaker's Nevada gigafactory.

The California automaker is also aiming to lower the cost of its batteries with a more streamlined and efficient battery production process and is turning to a South Korean company to help meet its goal.

South Korean business conglomerate Hanwha Group said this week that its subsidiary Hanwha Corp. recently signed a supply deal on battery production equipment with Tesla. Hanwha's businesses range from aerospace to the manufacturing of solar energy products.

According to the Korean Times, a company official said its machinery division recently signed a deal with Tesla to supply battery production equipment used in the process. 

"We had a supply deal of battery formation equipment with Tesla," the official said without providing further details.

The equipment Tesla ordered is used for initial testing and discharging of the batteries after they are manufactured. This process is known as "battery formation." Hanwha's machinery division also produces equipment needed for the assembly of battery cells, although it's not clear if the company will supply this equipment to Tesla.

Hanwha's battery formation equipment will initially be supplied to Tesla's Fremont, California factory then to the company's gigafactory in Nevada, followed by Germany and China, according to South Korean news site TheElec.

Battery Formation

Battery formation includes charging and discharging of battery cells after manufacturing. It's necessary for providing a stable solid electrolyte layer on the positively charged anode material. It's the final phase of the production process to format the battery cells before being installated in Tesla's vehicle battery packs. 

The battery packs in Tesla vehicles are composed of thousands of individual cells, which are currently being manufactured in the U.S. at Tesla's Nevada gigafactory in a joint venture with Panasonic.

The battery formation process relies on highly specialized, high-voltage equipment to charge and discharge a battery. This process ensures that Tesla's EV batteries last for the intended lifetime. 

For the Tesla Model S and Model X SUV, the company offers a warranty of 8 years or 150,000 miles, with a minimum 70% retention of the original battery capacity over the warranty period. 

Battery formation is currently the main bottleneck in the battery manufacturing process, according to German semiconductor company Infineon Technologies AG. Nearly every newly produced EV battery is subject to the formation and testing process before it can be installed in an electric vehicle. 

The charge and discharge cycles that activate the material in a newly made battery cell or pack can take up to 20 hours. Despite the time it takes for battery formation, the process is essential to ensure the battery will last and perform as intended during repeated recharge and discharge cycles.

The advances in EV batteries that offer longer range will be one of the

major drivers in the global electric vehicle battery market, according to data from Bloomberg. 

Global automakers are forming partnerships with battery manufacturers to develop lower cost batteries with higher energy density which equates to longer range for their future EVs. Meanwhile, next-generation batteries are being developed that accept higher charging rates. 

However, Tesla has been working to scale back its partnership with Panasonic producing EV batteries. In April 2019, Tesla and Panasonic announced they were suspending plans to expand the capacity at Tesla's Nevada gigafactory, which is the world's largest EV battery plant.

The two partners had planned to raise capacity 50% by this year, but with sales of electric vehicles performing below expectations Panasonic has held off its future investments. Panasonic also announced last year it was suspending its planned investment in new Tesla's factory in Shanghai. 

Panasonic first signed a supply contract with Tesla in 2009. In 2010, Panasonic invested a $30 million stake in the promising EV young startup.

Tesla said it was committed to buying batteries for the cars built at its new Shanghai factory from a number of Asian battery makers, but perhaps the company is looking to lessen its reliance even further on outside suppliers.

Tesla currently produces more batteries in terms of kWh than all other automakers combined. The company expects that the cost of battery cells will significantly decline through economies of scale and innovative manufacturing.

By reducing the cost of its batteries, Tesla can make its vehicles more affordable.

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