Tesla has signed an agreement with LG Chem to source batteries from the South Korean electronics giant for cars built at its planned Shanghai factory, which is expected to come online later this year, Bloomberg News reported Friday.
The batteries, an unnamed source told the outlet, will be produced about 200 miles away from Tesla’s Chinese factory, and will be used in Model 3’s at first, followed by the Model Y when it is released.
Bloomberg also reported that Tesla was seeking to source battery components in China from other suppliers in addition to LG Chem, including Contemporary Amperex Technology.
In the United States, where all of Tesla’s cars are currently produced, batteries are supplied through a partnership with Panasonic. Though in recent months, there have been reports that the two companies’ relationship has become strained.
In April, CEO Elon Musk said that Panasonic’s slow production was holding back Model 3 production, and had not yet reached the promised 35 gigawatt-hour planned capacity. At the time, insiders told Business Insider that Panasonic’s side of the battery-making business in Nevada was plagued by chaos and wasted materials.