Tesla Inc. Gigafactory 2
Justin McAnear left his job as vice president of worldwide finance in Tesla. He confirmed his last day with the company is on Oct. 7. (Photo: REUTERS/Brendan McDermid)

Tesla's Gigafactory in Shanghai, China is nearing its completion. A new report claims that the big T will soon team up with LG Chem. The South Korean company is Tesla's new partner and will provide the company with 2170 cells for the production of Tesla Model 3 and most likely Tesla Model Y.

Tesla has been recently looking for a battery cell supplier that can help the Chinese Gigafactory 3 keep up with its target production rate. And, it seems that the big T has already found the supplier in LG Chem. Tesla already inked a deal with the South Korean electronics giant for cars produced at the Gigafactory in Shanghai.

Bloomberg reports that the Gigafactory 3 will very soon come online. Many believe that the deal with LG will not be exclusive, and with the latest news, it's stock prices rose. According to the report, LG Chem will supply the 2170 cells that will be used by Tesla Model 3 and the Model Y. The South Korean electronics giant also has deals to supply to other companies like Volvo and General Motors.

The Tesla Model 3 is expected to begin its production in China later this year and with the contract with LG being not exclusive; it simply means that Tesla could still source its battery cells from other suppliers. The Gigafactory production in China is part of the electric vehicle pioneer's goal into the biggest market in the world for vehicles utilizing a new kind of energy.

Tesla aims to utilize several battery suppliers for its electric vehicles produced in China aside from LG. Earlier reports were claiming that the company is also talking to top Chinese battery makers including Contemporary Amperex Technology Co. Ltd. The company produces batteries for Tesla in its Gigafactory 1 in Nevada.

The Gigafactory 3 located in Shanghai is expected to begin the production of electric vehicles from knockdown kits by the end of 2019. Although the facility is still under construction, the company is reportedly starting to manufacture more in-house components. The latest deal will LG will have small to zero bearing on the EV maker's long history with Panasonic in terms of battery production according to CNET. Panasonic is one of the companies supplying batteries for Tesla's Gigafactory 1 in Nevada.