Tesla with Leash in China... 39% Dependence on Battery Sector

Supply Chain Dependence on China at 17%
Second Highest After US at 22%
LG Energy Solution, Sebang Battery, Samsung SDI
Top Dependence Among Korean Battery Companies

Despite the Biden administration's Inflation Reduction Act (IRA), it was found that 17% of Tesla's supply chain still depends on China. The trade proportion with China was high in key electric vehicle components such as batteries, non-ferrous metals, and specialty chemicals. Korean companies were analyzed to have particularly deep cooperative relationships with Tesla in the battery sector.

On the 9th, Japan's Nihon Keizai (Nikkei) reported in a special feature titled "Economic Security Lithium World War" that, based on an analysis of Tesla's partners conducted with data analytics firm Fronteo, Tesla's dependence on China reached 17% (2,246 companies). This was the second highest level after the United States (22%, 3,007 companies). Japan accounted for 7% (888 companies), while South Korea (722 companies) and Germany (687 companies) each accounted for 5%.

Nikkei explained that by using artificial intelligence (AI) and publicly available materials such as securities reports, it was possible to estimate 13,428 companies up to the 5th-tier suppliers related to Tesla electric vehicle manufacturing.

By sector, among 62 battery-related companies, 39% were Chinese firms; in the non-ferrous metals sector excluding aluminum, 40% of 42 companies were Chinese; and in the specialty chemicals sector, 33% of 102 companies were Chinese.

Nikkei emphasized, "The dependence on Chinese companies exceeded that of the United States, Japan, South Korea, and India," and highlighted that "even Tesla is connected by the 'red chain' of lithium."

The newspaper also disclosed a "Choke Point (Strategic Key Point) Score," which converts the degree of dependence manufacturers have on suppliers into a score. As a result, in the battery sector, 6 out of the top 10 companies were Chinese firms: Shenzhen Kedali Industry, Miracle Automation Engineering, Gangfeng Lithium, Shanghai Putailai Xinxin Energy Technology, CATL, and BTR New Materials.

In the specialty chemicals sector, 9 out of the top 10 companies by choke point score were Chinese, and in the non-ferrous metals sector excluding aluminum, 4 out of 10 were Chinese companies.

Notably, among the companies found to hold Tesla's "leash," there were also a significant number of Korean firms. In the battery sector, 4 out of 10 companies were Korean: LG Energy Solution (5th), Sebang Battery (6th), Samsung SDI (7th), and Korea Atlas BX (10th).

LG Energy Solution and Samsung SDI supply cylindrical batteries to Tesla. Sebang Battery, the top lead-acid battery company in Korea, is expanding its business into the battery pack sector to respond to the secondary battery market. Korea Atlas BX is a battery subsidiary under Hankook Tire.

In the non-ferrous metals sector, LS and Taekyung Industry were listed. LS is understood to have direct and indirect business relations with Tesla through its non-ferrous metals subsidiary LS MnM (formerly LS Nikko Copper). Recently, the LS Group also established a joint venture with L&F, a supplier of cathode materials to Tesla, entering the precursor business.