Tesla troubles hit Korean companies supplying EV maker

Prospects are dimming slightly for Korean companies betting on big business with Tesla as trouble descends on Elon Musk's pride and joy. With the world's biggest EV maker facing delays, a weakening market and some reputational damage, battery...

Tesla'sl Cybertruck features camera modules from LG Innotek and Samsung Electro-Mechanics. [TESLA]

Prospects are dimming slightly for Korean companies betting on big business with Tesla as trouble descends on Elon Musk's pride and joy.

With the world's biggest EV maker facing delays, a weakening market and some reputational damage, battery, chip and component makers, some of the country's biggest companies, may be caught short.

A few smaller companies as well.

“It's true we spent a lot to transit our auto parts to EV-dedicated components. We were excited that we could supply to Tesla,” said a spokesperson for an unnamed mid-sized auto part maker. “But now, the liquidity burden falls on us due to rising interest rates while production has constantly been delayed.”

Austin, Texas-based Tesla previously announced that it will introduce the new Cybertruck this year. That didn't happen.

Its most recent release was the Model Y, in 2020.

Tesla delivered a total of 343,830 vehicles in the third quarter, falling short of analyst predictions of 370,000. The gap is largely due to a halt at Tesla's Shanghai plant, which produces almost half the company's cars.

Reuters reported that Tesla suspended work at the Shanghai factory for nine days from Dec. 24 amid the Covid-19 pandemic. It will operate from Jan. 3 to Jan. 19 but will stop again from Jan. 20 to Jan. 31 for an extended break for the Chinese New Year.

The company has also been hit hard by Elon Musk's purchase of Twitter, which alienated potential Tesla purchasers.

Tesla stock is down almost 70 percent this year and lost more than 11 percent of its value on Tuesday.

Big Korean companies that were hoping for some Tesla magic might find themselves getting less business than hoped.

Samsung Electronics produces the self-driving chips for Tesla, and the company was planning to manufacture the upgraded chips for Cybertruck.

“Samsung Electronics was expected to produce the chips with the 7-nanometer process," said an industry insider. "But there is a possibility that Samsung may only produce the initial production line and for the latter, TSMC may produce a 4-nanometer chipset.”

LG Innotek and Samsung Electro-Mechanics are reported to have gained orders from Tesla for its camera modules.

Battery companies are impacted as well.

Tesla in 2020 introduced “4680” cylindrical batteries, batteries 46 millimeters in diameter and 80 millimeters in height. They have a higher energy density than existing batteries, reducing battery costs by 50 percent.

Domestic companies producing air conditioning, thermal management system and chassis components for Tesla are growing uneasy.

“As mass production for new models after Cybertruck continues to be postponed, financial burden grows bigger for domestic companies,” said a source from an electronics component company.

“The combo of the close-off of the China market, national conflicts between the United States and China and difficulty in producing next-generation technology have made the situation difficult for domestic companies as well,” said researcher Koh Tae-bong of Hi Investment & Securities.

“Nevertheless, digital transition to electric and autonomous vehicles, artificial intelligence and supercomputers is a natural trend that cannot be ignored.”

BY LEE DONG-HYUN [lee.jaelim@joongang.co.kr]