Tesla Working Exclusively with Panasonic for Model 3 Battery

Tesla Motors is working exclusively with Panasonic to supply batteries for the Model 3, its first mass-market car, the U.S. automaker's chief executive said on Wednesday, sending Panasonic shares higher.

Reuters reported a day earlier a source with direct knowledge of the matter saying that Samsung SDI was making progress in talks with Tesla to supply batteries for the electric car, as well as Tesla's energy storage systems.

The source said Tesla, which currently buys batteries from Panasonic, was likely to add Samsung SDI as a supplier for Model 3 if and when Tesla's battery plant were not able to produce enough batteries to meet demand.

Tesla Chief Executive Elon Musk tweeted on Wednesday the company was "working exclusively with Panasonic for Model 3 cells."

In a response to Reuters' inquires, a Tesla spokeswoman said on Tuesday by email that "Tesla works with all leading battery manufacturers around the world, however we don't comment on the details of the programs with specific suppliers."

Panasonic said last month it was ready to bring forward its investment in Tesla's battery plant it is helping establish if required to meet demand for Tesla's first mass-market car.

The Japanese company plans to contribute $1.6 billion to Tesla's $5 billion "Gigafactory" in phases over the next few years.

Citing "tremendous demand," Musk said in April that Tesla planned to boost total vehicle production to 500,000 in 2018 - two years earlier than its original target. Suppliers have said the goal will be difficult to achieve.

Tesla has taken 373,000 orders for its Model 3 - which has a starting price of $35,000, about half its Model S - and has said it would begin customer deliveries in late 2017.

"It remains to be seen whether the orders will translate into actual sales," the Reuters source said, asking not to be identified as the discussions were confidential.

A Samsung SDI spokesman declined to comment.

Shares in Samsung SDI tumbled 8 percent on Wednesday after surging 6.3 percent a day earlier.

Shares in Panasonic gained as much as 6.3 percent to a one-week high on Wednesday after Musk's comment. It closed up 3.5 percent.

(Reporting by Hyunjoo Jin; Editing by Eric Meijer)