Tesla absorbing most of the supply
The global shortage in cylinder batteries is taking a serious term as multiple power tool companies, including Stanley, Bosch, and Makita, have sent multiple requests for batter supplies to LG Energy Solution and Samsung SDI, people familiar with the matter said on Friday.
Some of the companies have paid upfront for the batteries and are actively seeking supply, they said.
Besides the power tool industry, home appliance companies are also being affected. Companies that manufacture wireless cleaners __ which must have the batteries __ are especially feeling the brunt of the shortage. Dyson, Electrolux, LG Electronics, and Samsung Electronics compete in wireless cleaners.
Even LG Electronics is finding it difficult to get adequate supply of batteries from sister company LG Energy Solution, the people said.
The shortage in cylinder batteries is being caused by surge in demand for power tools due to the construction industry recovering and Tesla buying them in bulk. Tesla Model 3 sold 360,000 units last year.
Tesla procures its cylinder batteries from Panasonic and LG Energy Solution. The company is LG Energy Solution’s top priority.
Some of LG’s customers suffering from the shortage, who could not get sufficient supply from its main supplier, has turned to Samsung SDI for more supply. However, Samsung SDI is yet to respond to those requests. Last year, Samsung SDI didn’t invest in cylinder batteries and won’t be able to expand production in the short-term, the people said.
Even if battery companies expand their cylinder battery production capacity, their supply will likely be focused on electric vehicle companies for the short-term. They suffered from lower-than-expected demand for batteries from power tools and wireless cleaners back in 2019. They have turned to electric vehicles instead as it is a more stable market.