Report: Tesla's Battery Partner Grows Wary, Freezes Spending

Steph Willems
by Steph Willems

Tesla’s lackluster first-quarter deliveries report did more than spook analysts and investors — it also provided the rationale for Panasonic to reevaluate its relationship with the automaker. Japan’s Nikkei Asian Review reports that the battery maker, which partnered with Tesla on the automaker’s Nevada Gigafactory 1, has grown cold feet.

The publication reports the two companies have frozen spending on the Nevada plant, culling plans for an expansion of battery production. Not only that, Panasonic has decided not to invest in Tesla’s Shanghai vehicle/battery production facility.

Weakening demand for Tesla vehicles and financial losses at Panasonic’s Tesla EV battery business are behind the move, Nikkei reports. The two partners had expected to grow Gigafactory capacity by 50 percent by 2020, with Panasonic on the hook for a further $900 million to $1.35 billion. Gigafactory 1 has gobbled up $4.5 billion from both companies since its creation.

Panasonic’s Tesla EV battery business reportedly lost roughly $180 million in the last fiscal year, with delays in getting Model 3 production up to speed hurting the supplier. The automaker’s Q1 delivery report showed a 31-percent reduction from the previous quarter. Production also fell.

With lofty production targets now looking less likely, it seems Panasonic moved to stem its losses. The partners will reportedly reevaluate their Gigafactory plans in 2020, or perhaps later, with further expansion dependent on sales volume.

“We will of course continue to make new investments in Gigafactory 1, as needed,” a Tesla spokesperson told Nikkei.

“Panasonic established a battery production capacity of 35GWh in Tesla’s Gigafactory 1 by the end of March 2019 in line with growing demand,” Panasonic said. “Watching the demand situation, Panasonic will study additional investments over 35GWh in collaboration with Tesla.”

In Shanghai, where Tesla’s new plant is under construction, Panasonic is suspending its expected investment, providing just technical support and a small number of Gigafactory-sourced batteries instead. It’s not entirely unexpected news. Tesla CEO Elon Musk claimed, earlier this year, that initial Model 3 production would commence in China by the end of this year — a very ambitious timeline. It isn’t known how Panasonic backing out will impact the company’s bottom line, or when Chinese customers can expect their domestically produced Teslas.

[Image: Tesla]

Steph Willems
Steph Willems

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  • EBFlex EBFlex on Apr 11, 2019

    Panasonic wants out. They realize that Tesla is a terrible company run by a guy who is very unstable and a massive risk. My guess is Panasonic wants to do business with a reputable automotive company that has a sound business and knows how to build cars.

    • See 5 previous
    • Higheriq Higheriq on Apr 12, 2019

      @SuperCarEnthusiast Tesla is headed down the tube. What is your point?

  • Bullnuke Bullnuke on Apr 11, 2019

    There have been several posts over the last few days regarding Elon and his Tesla but I choose this one to applaud Mr. Musk and the SpaceX team. I just saw the Falcon Heavy launch and recovery of all three boosters. Damned awesome! He may be having issues with his terrestrial vehicles but his adventures into space are truly amazing and appear damned successful. Bravo!

    • See 2 previous
    • JimZ JimZ on Apr 12, 2019

      @ToolGuy Since that’s not going to happen, why should I waste any time on your nonsensical what-if?

  • Ronin The very asking of the question "Are Plug-In Hybrids the Future?" is an interesting one. Because just 2 or 3 years ago we'd be asking- no, asserting- that E cars are the future. We're no longer asking that question.
  • Peter Benn There apparently were some K-code 4-dr sedan Fairlanes. Collectible Automobile Apr 2024 has found a '63 500 with HD 3/spd.
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  • Rust-MyEnemy Whoa, what the hell is wrong with Jalop1991 and his condescension? It's as if he's employed by Big Plug-In or something."I've seen plenty of your types on the forums....."Dunno what that means, but I'm not dead keen on being regarded as "A type" by a complete stranger"" I'm guessing you've never actually calculated by hand the miles you've driven against the quantity of gas used--which is your actual miles per gallon."Guess again. Why the hell would you even say that? Yes, I worked it out. Fill-to-fill, based on gas station receipts. And it showed me that a Vauxhall Astra PHEV, starting out with a fully charged PHEV battery, in Hybrid mode, on my long (234-mile) daily motorway daily commute, never, over several months, ever matched or beat the economy of the regular hybrid Honda Civic that I ran for a similar amount of time (circa 5000 miles)."You don't use gasoline at all for 30-40 miles as you use exclusively battery power, then your vehicle is a pure hybrid. Over 234 miles, you will have used whatever gas the engine used for 200 of those miles."At least you're right on that. In hybrid mode, though, the Astra was using battery power when it wasn't at all appropriate. The petrol engine very rarely chimed in when battery power was on tap, and as a result, the EV-mode range quickly disappeared. The regular hybrid Civic, though, deployed its very small electric reserves (which are used up quickly but restore themselves promptly), much more wisely. Such as when on a trailing throttle or on a downward grade, or when in stop-start traffic. As a result, at the end of my 234 miles, the Civic had used less gas than the Astra. Moreover, I hadn't had to pay for the electricity in its battery.I look forward to you arguing that what actually happened isn't what actually happened, but I was there and you were not."Regardless, that you don't understand it appears not to have stopped you from pontificating on it. Please, do us all a favor--don't vote."You really are quite unpleasant, aren't you. But thanks for the advice.
  • Tassos Jong-iL Electric vehicles are mandated by 2020 in One Korea. We are ahead of the time.
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