Tesla's $4.3B Battery Pivot Just Shook the Supply Chain--But Investors Didn't Cheer
Warning! GuruFocus has detected 6 Warning Sign with IST:AKBNK.
Investors have taken notice, as this is the second major South Koreabased supply chain deal Tesla has struck in less than a week. Just days earlier, it signed a $16.5 billion semiconductor contract with Samsung to manufacture its next-gen AI6 chip in Texas. Tesla has been vocal about its limitations in scaling LFP battery production domestically. CFO Vaibhav Taneja acknowledged in the April earnings call that existing equipment in its Lathrop factory could only support a small fraction of what's needed. He noted that Tesla has been actively working on building out non-China-based capacity, but admitted it will take time.
This deal could represent a meaningful step in that direction. LG Energy has already begun LFP battery production in Michigan and is expanding output at a joint venture facility with GM in Tennessee. While Tesla shares were down nearly 1% as of 11:25 a.m., the move may reflect broader market sentiment or investor caution rather than a direct reaction to the LG Energy announcement. Meanwhile, CATLTesla's Chinese battery suppliersaw its shares plunge 7.7% in Hong Kong, marking their steepest single-day decline since listing. Markets may be beginning to price in a longer-term pivot in Tesla's procurement strategy, one that increasingly favors U.S.-built components amid a more protectionist trade environment and softening energy segment performance.
This article first appeared on GuruFocus.
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