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Tesla, Panasonic To Watch Electric Cars Demand Before New Investment In Battery Plant

Tesla, Panasonic To Watch Electric Cars Demand Before New Investment In Battery Plant
According to a statement issued by US electric car maker Tesla on Thursday, new investments in the Gigafactory of Tesla would be made as needed jointly by Panasonic Corp and the U.S car maker.
In a separate statement, Panasonic said that before taking a final call on investments for capacity expansion of Tesla’s Gigafactory in Nevada, it would closely monitor the demand position in the electric car market.
The comments were made by the two companies in response to a report published by Japan's Nikkei which had claimed that the two companies had temporarily halted plans of capacity expansion of the plant. Batteries for Tesla cars are made at the Gigafactory in Nevada.
"Both Tesla and Panasonic continue to invest substantial funds into Gigafactory," a Tesla spokesperson said. "That said, we believe there is far more output to be gained from improving existing production equipment than was previously estimated."
The Nikkei report also had also claimed that plans for a 50 per cent expansion of the capacity of Gigafactory 1 next year were put on hold by the two companies because of financial issues. No further details however were provided in the report.
The newspaper had also informed that $4.5 billion in the facility had been jointly invested by the two companies already and there were plans for capacity expansion of the plant 35 GWh currently to the equivalent of 54 gigawatt hours (GWh) a year in 2020 from 35 GWh at present.
Batteries for about 500,000 electric vehicles a year can be produced at 35 GWh capacity, sources told Reuters. This meant that had the expansion been undertaken, it would have increased capacity to make batteries for about 770,000 electric vehicles a year.
"Panasonic established a battery production capacity of 35 GWh in Tesla's Gigafactory 1 by the end of March 2019 in line with growing demand," Japan-based Panasonic said in an email. "Watching the demand situation, Panasonic will study additional investments over 35 GWh in collaboration with Tesla," it added.
None of the details of the future expansion plans of the factory were made public by any of the two companies even though in October, Panasonic had said that it was holding negotiations to make more investments in the plant so that the capacity would go beyond the 35 GWh.
There was a drop of 2.8 per cent in Tesla stocks on the Nasdaq on Thursday, while an increase of 2.6 per cent in shares of Panasonic in midday Tokyo trade on Friday was noted.
"Panasonic shares have been dragged down by various Tesla woes," Masayuki Otani, chief market analyst at Securities Japan. "Turning cautious about further investments is good for Panasonic. It helps the company reduce the influence of Tesla."
Tesla exclusively gets batteries for its electric cars from Panasonic which also makes the US company the largest electric vehicle battery client for the Japanese company. However Tesla has said in February that U.S. energy storage company Maxwell Technologies Inc would be bought by it. That news had sent Panasonic stocks tumbling.

Christopher J. Mitchell

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