South Korea’s Mando in talks to supply parts for Tesla’s Model 3: source

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Tesla Motors' mass-market Model 3 electric cars are seen in this handout picture from Tesla Motors on March 31, 2016. REUTERS/Tesla Motors/Handout via Reuters/File Photo
Tesla Motors’ mass-market Model 3 electric cars are seen in this handout picture from Tesla Motors on March 31, 2016.

Reuters/Tesla Motors/Handout via Reuters/File Photo

Mando Corp (204320.KS) is in talks with Tesla Motors (TSLA.O) to supply parts for its Model 3 car, an industry source said, as it seeks to join other South Korean firms supplying components for Tesla’s more affordable electric cars.

Mando, which makes steering, brake and suspension parts, currently supplies steering racks for Tesla’s Model S vehicles.

The source did not give any details on the parts that Mando could provide for the cheaper Model 3, citing confidentiality. A Tesla spokesperson was not immediately available for comment. A Mando spokesman declined to comment.

South Korea’s Maeil Business Newspaper reported on Monday that Mando had been picked by Tesla to develop and supply self-driving car technology and parts, pushing up Mando’s share price.

Asked for comment, a Tesla spokesperson in San Francisco said: “The rumors are not true. Tesla currently sources steering racks for its Model S vehicles from Mando. It does not supply autonomous technology systems.”

Mando has two U.S. factories, in Alabama and Georgia, catering to demand from Hyundai Motor (005380.KS), General Motors (GM.N) and Chrysler.

By 2020, the company aims to generate half of its revenue from next-generation products, including semi-automated driver assistant systems, used in Hyundai Motor’s Genesis G90 luxury sedan.

“Tesla is turning to South Korean parts makers, which are more cost-competitive than Japanese rivals, as the electric car start-up plans to drastically cut costs for the cheaper Model 3,” said Eim Eun-young, an auto analyst at Samsung Securities.

LG Display (034220.KS) and Hankook Tire (161390.KS) are among South Korean firms which plan to supply their products for the Model 3, sources have said.

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

(Reporting by Hyunjoo Jin in SEOUL, Additional reporting by Alexandria Sage in SAN FRANCISCO and Dahee Kim in SEOUL; Editing by Richard Pullin)