Tesla says it has battery quotes from China's Lishen but no deal agreed

Tesla says it has received quotes from Tianjin Lishen to supply batteries for its new Shanghai electric car factory, but has not signed any agreement with the Chinese company.

"Tesla previously received quotes from Lishen, but did not proceed further," a Tesla spokesman said on Tuesday.  "We have not signed any agreement of any kind with them."

Earlier on Tuesday, Reuters quoted two informed sources as saying that Tesla and Lishen had signed a preliminary agreement and were working on details.

The companies had to decide how big  an order the US electric car company could place. Lishen was still working out what battery cell size Tesla would require, one of the sources said.

Japan's Panasonic is Tesla's exclusive battery cell supplier at present. Its share price was 2.7%  down at close of trade after the Reuters report.

Tesla CEO Elon Musk said in November the US company would manufacture all its battery modules and packs at the Shanghai factory and planned to diversify its sources.

"Cell production will be sourced locally, most likely from several companies (including Pana), in order to meet demand in a timely manner," Musk said in a tweet in November.

Panasonic said it was studying various possibilities on Tesla's Shanghai plant, but nothing had been decided. It declined to comment on the possibility of losing exclusive-supplier status with Tesla.

Lishen did not respond to a request for comment.

Other battery makers in the running for contracts could include Contemporary Amperex Technology and LG Chem.

Tesla broke ground on the $2bn  Gigafactory, its first in China, earlier this month and plans to begin making Model 3 electric vehicles (EV) there by the end of the year.

Musk has said the factory will produce "more affordable" vehicles for the Chinese market, the world's biggest, where Tesla faces mounting competition and risks with US-China trade tension.

Lishen, which says its clients include Apple, Samsung Electronics, Geely and Hyundai Motor, has joined other battery makers in aggressively pursuing contracts with the rapidly growing EV industry.

The Chinese company started mass production of cylindrical batteries the same as those made by Panasonic for Tesla's Model 3 in 2017, in the city of Suzhou about 100 km  from Shanghai.

Reuters reported on Monday that Panasonic and Toyota Motor Corp set to launch a joint venture in 2020 to produce EV batteries in competition with Chinese rivals.

A joint venture would build on the agreement that the pair announced in late 2017 on joint development of batteries with higher energy density in a prismatic cell arrangement. It would help Panasonic cut its heavy reliance on Tesla, the production delays of which have weighed on the Japanese company's earnings.

Panasonic planned to shift most of its prismatic battery-related equipment and facilities in Japan and China to the joint venture, while those producing batteries for Tesla would remain under the company, a source said.

Reuters