Move Over Tesla: LG Chem Now Largest Manufacturer of Electric Car Battery Packs Thanks to Daimler Deal

Californian automaker Tesla Motors might have it sights on building its first gigafactory, the world’s biggest lithium-ion manufacturing and reprocessing facility to date in the world, but a brand new contract between South Korean firm LG Chem and Daimler AG means that for now, Tesla won’t be number one when it comes to sheer volume of automotive-grade lithium-ion packs.

The next-generation Smart ForTwo EV will benefit from LG Chem battery packs.

The next-generation Smart ForTwo EV will benefit from LG Chem battery packs.

According to an official press release made on Tuesday by LG Chem, the firm has just been selected by Daimler AG as the supplier of lithium-ion battery cells for the next-generation 2017 Smart ForTwo electric car.

The current model year car — which retains the outgoing body style of the old 2014 model-year Smart ForTwo rather than the all-new body style of the 2015 gasoline-powered Smart ForTwo, offers an EPA-approved range of 68 miles per charge and an everyday ‘achievable’ range somewhere between 40 and 80 miles per charge, depending on the weather conditions and terrain.

2015 Smart Electric Drive arrives at Cars & Croissants Photo: (c) Bearded Mug Media

2015 Smart Electric Drive arrives at Cars & Croissants Photo: (c) Bearded Mug Media

Previous generations of the Smart ForTwo EV — previously called the Smart ForTwo ED — have been built with a variety of different battery pack technologies, ranging from 12 kilowatt-hour molten salt (sodium-nickel chloride) ‘Zebra’ batteries in the first-generation, limited production 2007 Smart ForTwo prototypes through to a 16.5 kilowatt-hour Tesla Motors lithium-ion battery pack in the second-generation 2009 Smart ForTwo and finally a more powerful, 17.6 kilowatt-hour lithium-ion battery from Daimler-owned subsidiary Deutsche ACCUmotive for the current 2012-2015 model year car.

Cost effective

Why move away from its own wholly-owned battery supplier? Well, while it might appear that way, we’re suspecting that’s not exactly the case. While Daimler will look to LG Chem for battery cells, we’re suspecting the assembly of those cells into battery packs will still be carried out by Deutsche ACCUmotive.

Smart ForTwo ED

The current Smart ForTwo uses battery packs made by a Daimler subsidiary.

Daimler, like many other automakers, has dramatically expanded its investment in lithium-ion battery manufacturing and plug-in vehicle development as a way to help it meet increasingly tough global fuel economy and emissions standards. With multiple plug-in hybrid models planned across its various brands — ranging from high-end cars like the Mercedes-Benz S-Class plug-in hybrid luxury sedan through to more mainstream models like the Smart For Two EV — Daimler’s demand for battery packs is skyrocketing.

But while Daimler may be able to produce its own battery packs through Deutsche ACCUmotive, developing and producing the cells themselves is a costly and expensive business. As we discovered when visiting Nissan’s own lithium-ion battery manufacturing facility in Sunderland, England last year, building battery packs from pre-assembled cells requires semi clean-room facilities. Producing the cells themselves requires the kind of clean-room practices and equipment normally reserved for the semiconductor industry.

LG Chem, as a leading battery manufacturer, already produces lithium-ion cells for thirteen different global automakers out of the top 20 global brands, including GM, Ford, Hyundai and Renault. It already has the expertise and the equipment to make battery cells at a far higher volume and lower cost than we’re guessing Daimler could manage at the current time.

Longer-range?

Although we’re sure battery cost and volume was a deciding factor for the new partnership, we’re also guessing that LG Chem’s latest battery technology — which it promised last year would soon make a super energy-dense battery pack capable of providing at least 200 miles of range per charge.

Far more advanced than its previous battery technology, this wonder battery pack is likely to find itself into Chevrolet’s upcoming 2017 Bolt electric car. We’re sure it may find itself into other automaker’s cars too, and Daimler could very well be at the top of the list.

QuickCharge: Smart ForTwo Electric Drive (Mark Drives)

As we explained in our first ever Charged UP episode, range was a problem with the current Smart.

That’s because while the Smart ForTwo’s compact dimensions and tall body are best suited to an electric rather than internal-combustion engine setup, its tiny frame means that space really is limited for an on-board battery pack.

The result? To date, the Smart ForTwo ED has remained very much a city car thanks to its limited battery capacity.

A super-compact, energy-dense battery pack built on LG Chem’s next-generation technology could change that however, enabling perhaps a range in excess of 100 miles per charge.

Using such a pack could also explain why Daimler made the decision to delay the rollout of an electric model based on the all-new 2015 Smart ForTwo and Smart ForFour models as it would give LG Chem time to fully refine its next-gen battery technology ahead of mass production.

Will we see a longer-range 2017 Smart ForTwo Electric?

Will we see a longer-range 2017 Smart ForTwo Electric?

We also note too that the all-new platform on which the 2016 gasoline Smart range is built upon — and on which the 2017 Smart ForTwo EV will be based — has been jointly developed with the Renault-Nissan alliance.

Renault, as we already mentioned, is an existing customer of LG Chem.

Do you think the new 2017 Smart ForTwo EV will improve on the range of the outgoing 2015 Smart ForTwo ED? And what do you make of the new alliance?

Leave your thoughts in the Comments below.

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  • RobertBoston

    I’m not sure I follow your math, Nikki. According to the press release, sales of all models of the Smart brand are about 100,000/year. Clearly most of those are ICE, not EV (last year, Smart’s EV sales were only 932 in North America). But a better product will yield more sales, so let’s assume Smart sells 20,000 of the refreshed EV annually. You speculate it will have a bigger battery, so let’s add 60% to the current battery to get a 30 kWh pack.nnnWith these generous forecasts, LG Chem will sell 600,000 kWh of batteries to Daimler annually. Last quarter, Tesla produced 10,000 Model Ss carrying about 800,000 kWh of batteries, so its annual production is 5x greater than LG Chem–and that’s at today’s production rates. Tesla is ramping capacity to 2,000 vehicles/week, which will use 160,000 kWh of batteries per week.nnnAnd then the Tesla Gigafactory comes on line, starting in 2016, and Model 3 sales begin in 2017. Tesla’s new paint shop is designed to handle 500,000 vehicles per year, according to a press release two days ago from Eisenmann.nnnSo, how are you figuring that LG Chem will pass Tesla?

    • Joseph Dubeau

      What’s a matter afraid of little competition?

      • JP

        More likely afraid of seemingly inaccurate reporting. Maybe Nikki will clarify.

      • just someone old

        Tesla only puts together batterypacks with cells bought from PanasonicnSo, Lg is competitor for Panasonic, not Tesla

    • TheFrequentPoster

      It’s worth pointing out that Tesla’s Q1 sales in the U.S. are down 9% from a year earlier. I don’t think it’s cheap gas, because people don’t buy $100,000 cars to save on gas. I think the novelty is wearing off, and/or the niche is becoming saturated.

  • BuckyFuller

    “but a brand new contract between South Korean firm LG Chem and Daimler AG means that for now, Tesla wonu2019t be number one when it comes to sheer volume of automotive-grade lithium-ion packs.”nnnFor now being the key part of the article, as well the total production from LG Chem now including this contract as compared to Panasonic/Tesla – the numbers are all surrounded in fog as we dont actually know what LG Chem output equals but regardless the horse race is now tightening.

    • RobertBoston

      And that’s a good thing, IMO. For EVs to knock ICE out of its dominant position, there will need to be a tremendous supply of batteries. Consumers will benefit from competition, both because of lower prices and more rapid technological advances.

      • TheFrequentPoster

        Batteries will have to be considerably larger, and far, far cheaper.

        • Good thing that’s exactly what is happening year by year!

          • TheFrequentPoster

            Incremental advances, mainly due to manufacturing economies of scale. There are no silicon economies with batteries, as there are with computers. Even if prices hit $200/kWh by 2020 as projected by McKinsey & Co., they’ll be 10 times too high. And ranges have to be much longer if EVs are ever going to equal the versatility of this:nnhttps://www.youtube.com/watch?v=jQ5tKh0aBDc

  • D. Harrower

    Not that this isn’t interesting, but it does seem like TE is reaching a bit to find a headline exclaiming that Tesla is being beat at something.

  • just someone old

    LG Chem is not competitor for Tesla, but for PanasonicnACCumotive could be called competitor from TeslanThey both buy batterycells and repackage themnnNothing stops TESLA from buying cells from LG too

  • jeffsongster

    The other car makers need to actually try to sell EVs and then they can outrun Tesla and AESC (Nissan/NEC) who are 1 and 2 now. This is a great PR piece… but it is just hype until they actually make a serious effort to sell cars. Compliance cars aren’t going to make a dent in these numbers. Especially as Tesla and Nissan sales continue to ramp. Even GM isn’t looking at BOLT as a major seller… they aren’t ready for that and it doesn’t start until late 2016 early 17. The best hope of LG Chem is for the deal they are rumored to have with Nissan for their next car. nI agree that the more the merrier… but those guys aren’t there yet.

    • TheFrequentPoster

      Tesla’s unit sales in the United States dropped 9% from 1Q14 to 1Q15. But, come to think of it, ramps can slope in both directions.nnhttp://insideevs.com/monthly-plug-in-sales-scorecard/

      • RobertBoston

        Inside EVs is only looking at N.A. deliveries. Tesla announced 1Q15 sales of 10,030 worldwide, an increase of 55% over 1Q14.nnhttp://ir.teslamotors.com/releasedetail.cfm?ReleaseID=904880nnBecause Tesla is production-constrained, the only thing we can learn about lower sales in N.A. is that Tesla chose to ship more cars overseas last quarter.

        • Unless Inside EVs have actual sales figures — remember we’re talking DELIVERIES not SALES — I think they’re probably guessing too.

          • TheFrequentPoster

            Inside EV’s numbers for Tesla have proved accurate over time, even though the company has lately been trying to conceal the segment details. I was a financial analyst, and in that position I followed a couple thousand companies. Not all at once, of course, but serially. Companies don’t conceal their sales numbers unless they are having problems. nnNever once saw it happen. When the news is good or even neutral, they tell you. When Elon Musk decided not to provide sales segment details, it was definitely one of those ah ha moments.Oh, and I’m neither long nor short TSLA shares, or derivatives. I might not be correct, but I’m honest.

  • Nikki, I can’t for the life of me understand the language and tone used to deride the range of the Smart ED. Daimler themselves market this little car as a city car, period. You will only references in their marketing to the Smart Fortwo Electric Drive as being a perfect little city car.nnMy Smart ED has made short work (pun intended) of my 40km round trip commute on city streets, in the heart of my city, for which this city car has been extremely well designed. A small and quick city runabout is exactly what I was looking for, and I have enjoyed every one of the thousands of km of driving in the city.nnPeace.

    • TheFrequentPoster

      If the EPA range of the unfortunately named ED is 68 miles, given that most drivers used 75%-80% of the “tank” before refueling, that makes for an average practical range of about 50 miles. Subtract 10 for living in a mild winter climate, and another 10 for a harsh winter climate — and more for the very coldest days. Add 10 for summer driving.nnI think that’s barely enough even for hobbyists and enthusiasts. My EV’s battery is bigger than the Smart’s so my year-’round average practical range on 75%-80% of the battery is 60 miles. Subtract 10 in winter, 15 for the coldest days. Add 10 in summer. If it was much less than that, it’d be a problem.nnThe Smart ED needs a much bigger battery.nnBy the way, I have observed that EPA ranges are pretty accurate.nnWar.

      • It’s not possible to travel faster than 40 km/h on average for the entire trip in the city on any normal roads with lights and traffic. nnA 70 km commute in the city would be ~90 minutes in the car in traffic at 40 km/h.nnnI don’t know about you, but spending that much time in a car every day would suck.nnThe Smart ED is well within the average commute distance, so that means 50% of the people in gas cars around me could have swapped out for an EV like mine and be saving like I am.nnEasily saving money compared to the gas car it replaced.

        • TheFrequentPoster

          I didn’t make my statement in vacuum. I own an EV. As for saving money, how much did your Smart ED cost, and how many miles a month (or year) do you drive, and what state do you live in? Or maybe you’re not American, given that you write in km?

          • Bought for under $19K all-in.nSaving >$100/mo on gas and $30/mo on insurance.nSpent $0 on maintenance (never been back to dealer) in 1.5 years.nnnPrevious car was paid for, but due to age (>10 years) was poor on gas (11l/100km), poor on maintenance (average $1000/yr) and due to lack of safety features, more expensive on insurance.nnnThe Smart ED is faster to the city speed limit than any other car I meet at the stop light, and so much easier to drive in the city. Loving it!

          • TheFrequentPoster

            How much does gas cost where you are, and how much does electricity cost per kWh? I know how negative I sound. In reality, I want EVs to make the transition to the mainstream. It’s how I evaluate the whole category, i.e. by mainstream standards.nnMy EV is the 11th vehicle I’ve owned, and that’s not counting the cars my parents owned when I was a kid. Nor does it count the hundreds of cars and trucks I’ve rented. This is to say that I’ve got a lot of experience with cars, and carefully compiled records on EV performance.nnIf you give me the data I asked for, it’s a no-brainer to give you an analysis of the economics of the Smart ED, vs. the Smart’s gas version.

  • Note from late 2014 press release : “Daimler subsidiary Li-Tec will stop producing Li-ion battery cells in December, closing the only German factory currently producing cells for EVs”. nnnDaimler had outlined their strategy of producing the battery pack themselves, while obtaining the battery cells from an outside supplier. Their pack production facility is in the process of being expanded according to press releases in early 2015.nnnThis “new” news of LGChem being the battery cell supplier is no surprise.nnnI only wish Daimler would actually produce the Smart ED in numbers. In the US, the EV version of the Fortwo was often 30% of total sales in the Smart brand in 2014. The only thing holding it back was lack of inventory. Many people wait 6+ months for a car after ordering. You have to be pretty motivated (happy) with your purchase to wait that long, I should know, I waited 9 months for mine in 2013!

    • Guest

      If the EPA range of the unfortunately named ED is 68 miles, given that most drivers used 75%-80% of the “tank” before refueling, that makes for an average practical range of about 50 miles. Subtract 10 for living in a mild winter climate, and another 10 for a harsh winter climate — and more for the very coldest days. Add 10 for summer driving.nnI think that’s barely enough even for hobbyists and enthusiasts. My EV’s battery is bigger than the Smart’s so my year-’round average practical range on 75%-80% of the battery is 60 miles. Subtract 10 in winter, 15 for the coldest days. Add 10 in summer. If it was much less than that, it’d be a problem.nnThe Smart ED needs a much bigger battery.nnBy the way, I have observed that EPA ranges are pretty accurate.

  • TheFrequentPoster

    I don’t think EVs have a chance to break out of their hobbyist-enthusiast niche until the micro- and compacts have at least a 60 kWh battery. This would enable a genuine year-’round average full range of about 200 miles in a climate with mild winters. Winter full range would be about 150 miles, and summer range about 250 miles. In a harsher climate, such as Chicago or Boston, winter range would be 120 miles. Harsh climate places often have blistering summers, so the use of A/C would probably shave 20 miles or so off the range.nnThose are theoretical full-ranges, i.e., from a full battery to “the car won’t roll.” No one drives like that in real life. The average EV driver uses 75% to 80% of the capacity per charge. So a “200 mile” car with the 60 kWh battery would, in daily use, go an average of about 150 miles in an ideal climate — 125 in winter, 190 in summer. In Chicago, 90 in winter, and 170 in summer.nnIs that enough? Range-wise, I think it could make inroads into the commuter car market, with one big caveat: Pricing. Batteries are hideously expensive, running at about $300 for kWh for replacements. That ought to trend down toward $200 in the next five years or so, but it’s still a very experensive gas tank — $12,000 for a 60 kWh battery in five years. Compare that to a gas tank that costs a couple hundred bucks, and it’s hard to see how the cars can be price competitive without subsidies.nnThe government subsidies in the U.S. are less important than people think, especially as prices drop. This is because they are tax credits that must be offset against tax liabilities to be claimed. Many taxpayers, especially those who buy $30,000 cars rather than Tesla status symbols, don’t have enough income to claim the full tax credit.nnNissan answers this by heavily subsidizing the LEAF through very attractive leases. Even then, though, a Versa (very similar to a LEAF) remains significantly cheaper any way you slice it. Bottom line: They need a minimum of 60 kWh to begin to possibly go mainstream, and even then it’ll be a challenge because of the cost issues.

  • Frank Clark

    Move over Tesla??? It’s a 40 mile battery!

  • Josco Energy

    I like more posts like this is Electric Car Battery Packs . Every time I get a valuable inspiration. Full marks to you. Keep it up and send us more blog posts.

    Josco Energy- Electricity Suppliers in New York