With a huge expansion of Tesla's manufacturing capacity coming in the next few years for the Model 3, they've made the critical decision to expand the supply base for a critical component of Tesla vehicles: the battery. The Korea Times revealed that Tesla has approached LG Chem, Samsung SDI, and SK Innovation as additional battery suppliers alongside current sole supplier Panasonic. Tesla is currently building an enormous battery pack manufacturing facility dubbed Gigafactory 1 in Nevada with Panasonic.

Tesla Model 3 and battery chassis at the Gigafactory

The reasoning for Tesla's expansion beyond the sole partnership with Panasonic is obvious: they need flexibility and reliability going forward as Model 3 production ramps up. That's not to say that Panasonic isn't capable of delivering, but it is worth noting that battery production rates and costs have been the primary restraining factor in Tesla's growth to this point.

LG Chem is already that world's largest battery supplier and seems likely to win a contract with Tesla, and sister company LG Display has been rumored to be a Tesla partner in producing the large floating center dash display for the Model 3. LG Chem already has a smaller battery contract with Tesla: the upgraded battery packs for the Roadster 3.0.

With 373,000 reservations for the Model 3 on file and a late-2017 volume production date on the horizon, Tesla's pulling out all the stops to ensure they're able to meet their deadlines. Adding additional battery suppliers gives Tesla some cost leverage with suppliers and flexibility with the Gigafactory construction timeline (moving up the 500,000 cars/year target to 2018 certainly generated some pressure).