TESLA Inc. agreed to buy batteries from South Korea’s LG Chem Ltd. to be used in electric vehicles produced out of China, Bloomberg News quoted sources as saying Friday.

Batteries made by LG Chem will be used initially in Model 3 cars manufactured in the plant in Shanghai, Tesla’s first outside of the United States, said the sources. LG Chem batteries will also be used in Model Ys produced there once the compact crossover car is released, they said.

The supply agreement isn’t exclusive to LG Chem, the sources said, meaning Tesla could procure batteries from other suppliers as the Model 3 maker prepares to start production in China later this year.

Tesla plans to use multiple battery suppliers for its China-made cars, the sources said, and has also been in talks with top Chinese battery producer Contemporary Amperex Technology Co. Ltd. about a supply deal, Bloomberg News reported in March.

Tesla has a long-standing relationship with Japan’s Panasonic Corp., which makes batteries with the carmaker in Nevada.

Talks with CATL are continuing but are taking time as the two sides discuss technical specifications, according to the sources. LG Chem was more flexible in meeting Tesla’s technology requirements, one of the sources said.

LG Chem will provide Tesla with so-called 21700 type battery cells, which have more capacity than some older battery types, one of the sources said. They will be made at LG Chem’s factory in Nanjing, which is about 200 miles (320 kilometers) west of Shanghai.(SD-Agencies)