They have a existential need for batteries with the Model 3. If they don't get the batteries they need when they need them, they go out of business. Verticall

They have a existential need for batteries with the Model 3. If they don't get the batteries they need when they need them, they go out of business. Vertically integrating the batteries helps prevent them from being screwed by problems elsewhere in their supply chain. They've had problems like this in the past. For the model S, some suppliers didn't actually believe that Tesla would actually want the scale of parts they had optioned for. When time came to deliver, the factory was ready, but the parts were just being produced half way across the world. Tesla had to pay substantial air freight costs.