Elon Musk Clarifies Samsung SDI Battery Rumor

Yesterday, the internet was ablaze with a rumor that Samsumg SDI and Tesla Motors were close to striking a deal that would have Samsung supplying batteries for the Tesla Model 3. Up to now, it has been assumed that those batteries would be produced in cooperation with Panasonic, which has made a major investment in the Tesla Gigafactory under construction in Nevada. Yesterday, the rumor caused consternation among several Model 3 reservation holders who said they wanted a Panasonic battery in their cars, not a cheap imitation from Samsung.

Samsung SDI EV battery cells

The rumor was given credence by a report by Bloomberg Technology saying an unnamed source in Korea had confirmed the rumor. The source did say, however, that nothing had been officially agreed upon yet. The reports of a link up between Tesla and Samsung were given further weight by a report this week in The Nikkei, a Japanese business journal.

It said on Monday that a large supply of battery cells from Samsung had arrived at the Tesla development center in California. The newspaper said the cells would undergo testing before being approved for use in Tesla automobiles. Shares of Samsung SDI rose nearly 8% on the news.

Overnight, Elon Musk took to Twitter to debunk the rumor.

After Musk’s tweets, Samsung SDI shares fell back to earth and shares of Panasonic surged. Being a day trader is fraught with danger. But then Musk clarified the situation further.

Most people still do not realize that Tesla is more than a car company that makes batteries. It is really a battery company that happens to manufacture automobiles. Global Equities analyst Trip Chowdhry told his clients last week he thinks the Tesla Gigafactory will be worth $50 billion when it is completed and will generate $100 billion in revenue for the company over the next 20 years.

The key to the battery rumors may be that batteries for electrical storage use a different chemistry than those intended to power an automobile. Tesla may feel the Samsung SDI batteries are more appropriate for storage duty than the cells it makes with Panasonic for its cars. A prudent investor could be forgiven for buying shares in both Panasonic and Samsung SDI today.

Steve Hanley

Closely following the transition from internal combustion to electricity. Whether it's cars, trucks, ships, or airplanes, sustainability is the key. Please follow me on Google + and Twitter.