By on April 11, 2019

Tesla Model 3, Image: Tesla

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]

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45 Comments on “Report: Tesla’s Battery Partner Grows Wary, Freezes Spending...”


  • avatar
    Vulpine

    I question the validity of the report, despite it coming through the Nikkei. I think the Nikkei has been fed false information.

  • avatar
    thelaine

    Tick tock

  • avatar
    redapple

    Who will buy Tesla?

    GGM?

    • 0 avatar
      FreedMike

      Toyota. Why do you think they haven’t invested in EVs?

      • 0 avatar
        ToddAtlasF1

        Because they know EVs belong back in the Victorian era, where they were first rendered obsolete by the superiority of ICE vehicles.

        • 0 avatar
          ToolGuy

          Some really old guys with broken wrists, arms and jaws might disagree with you – kidding.

          But if you use an electric starter on your ICE engine, you’re a complete hypocrite – still kidding.

          Question for anyone who might know: In theory could a modern ICE engine ‘bootstrap’ itself without any starter motor? The computer knows which piston is sitting on the power stroke – feed it fuel and spark and away we go?

          • 0 avatar
            TR4

            The engine also needs compression, which is normally obtained by rotating the crankshaft. That said, I’ve heard stories of starting an old engine by fiddling with the spark advance lever, but this is more of a chance occurrence than a reliable procedure.

          • 0 avatar
            theBrandler

            What I think makes a lot more sense than a pure battery electric car or the way we’ve gone about hybrid systems thus far, is the series hybrid. It’s used in heavy equipment, where electric motors drive the wheels and a diesel engine drives a generator. It’s much more efficient, and best of both worlds.

            You can refuel quickly and easily, and the engine can be tuned to run at the optimum speeds needed by the generator.

            Thus you could have a tiny turbo gasoline engine as your generator. A small battery is needed instead of a massive one. It’s kept ~60% all the time so it can provide bursts of acceleration and absorb regenerative braking.

            And the electric motor with their instant torque and reliability take up the propulsion duty at the axles.

            Every component doing what it does best. The only car to kinda do this was the Volt. In the i3 it was the “range extender”.

            Both cars saw the engine as an inconvenience to be avoided instead of the primary energy source. That’s backwards. It really just needs to be a generator-battery-motor that replaces the transmission.

            This is more efficient than a normal car, and cheaper than either a normal hybrid or electric. It’s a win win win – which of course is why no one has every made the darn thing for the road.

        • 0 avatar
          Vulpine

          It wasn’t the “superiority of ICE vehicles” that gave them the lead; it was the oil companies building gas stations in nearly every town and even between towns, giving anyone the ability to travel at speeds notably faster than a horse and refuel at rates faster than household current.

          That advantage is going away because on road trips, just like back in the “good old days”, there’s typically a restaurant nearby and after (while) you ‘fuel up’ you can ‘refuel’. Restaurants like Denny’s and the old railcar-style stainless-steel diners–all stereotypes today–were often built within easy walking distance of those newfangled gas stations. Well, now the high-speed rechargers are typically being installed near, if not at, restaurants for the simple sake of convenience–letting you recharge and ‘refuel’ at the same time.

          • 0 avatar
            JimZ

            That and the fact that they could run on gasoline, which was considered a useless waste product back in the early 20th century.

          • 0 avatar
            ToddAtlasF1

            What was gasoline a waste product of? Just think of all the effort we’re expending at refineries unnecessarily!

            Running on gasoline is a strength because of gasoline’s high energy density and content which far exceed the energy expended in its extraction and production, not merely because an entire distribution infrastructure had to be constructed to meet its demand.

          • 0 avatar
            Vulpine

            Gasoline, or as it was sometimes called, “naphtha”, was a waste product of making kerosine for oil lamps while the heavier oil, closer to the raw stuff that came out of the ground, was used as ‘bunker fuel’ in newer steamships and railroad locomotives into the ’40s. Naphtha was used more as a cleaning fluid–admittedly a highly volatile one–for cleaning grease and oil off of mechanical parts and even for cutting through some paints. It wasn’t until that waste material started being used as fuel for ICEs that the oil companies started actively distributing it and not simply burning it off (as they already burn off so much energy in raw flame at the refineries even now.)

            Believe it or not, a good resource would be to watch some of the old black and white movies filmed in the ’20s and ’30s of the last century.

          • 0 avatar
            JimZ

            “What was gasoline a waste product of?”

            kerosene, lamp oil, asphalt and lubricant production. Gasoline was far too volatile to use as lamp oil, and far too flammable to safely use as a solvent. the spark-ignition engine was an ideal use for it. Once electric lighting took over and reduced the demand for kero and lamp oil, refiners developed “cracking” processes to try to get more gasoline out of every barrel of oil

            I’d have thought you would have known that.

          • 0 avatar
            Vulpine

            “Gasoline was far too volatile to use as lamp oil, and far too flammable to safely use as a solvent.”
            — Perhaps. But I also know that as recently as 30 years ago, some automotive mechanics were still using it as a solvent to clean engine blocks, heads and other components of grease, oil and paraffin deposits as it was cheaper than ‘permissible’ solvents and did the job just about as well. Sure, it’s volatile but they were still using it as such then and 90 years ago they weren’t quite as picky about safety as they are today.

          • 0 avatar
            JimZ

            “Sure, it’s volatile but they were still using it as such then and 90 years ago they weren’t quite as picky about safety as they are today.”

            and I bet “spot the missing eyebrows” was a popular drinking game.

      • 0 avatar
        Rocket

        I don’t see it. For one, it’s a lot of money to spend. But more important, Toyota is all about profits. Besides, Toyota and Panasonic are already working together on solid state batteries. That’s where the profitability will come from.

        • 0 avatar
          FreedMike

          I’d say that if Toyota has something up its’ sleeve with batteries, then it makes even more sense for them to buy an EV manufacturer whole. And who’s the partner in the Gigafactory? None other than Panasonic.

          In essence, buying Tesla gives them an almost turn-key EV operation (well, at least as turn-key as it gets in the car biz).

          Pure speculation, of course, but it would explain why Toyota supposedly has zero interest in developing its’ own EVs.

          • 0 avatar
            Rocket

            Panasonic, yes, but with completely different technology. Plus, Panasonic seems to be an unhappy partner in the Gigafactory right now.

            If you were Panasonic, would you think Tesla or Toyota were the safer partner for long-term profits?

      • 0 avatar
        redapple

        Freed
        I think you got it.
        They are not big on Autonomy either. They let others work the bugs out and perfect the idea. Then, jump in. Yeah, they ll be a 1 or 2 late but they ll save TONS OF CASH. And the tech wont be making money until it s perfected anyway.

        Very Smart.

    • 0 avatar
      SuperCarEnthusiast

      Chinese based government backed car firm like they did for Volvo!

    • 0 avatar
      SuperCarEnthusiast

      “GGM buying”
      No! They hate Tesla as a company!

    • 0 avatar
      Higheriq

      Apple, Google, Amazon, or some Chinese automaker.

  • avatar
    FreedMike

    This is definitely not good news. China is probably critical to the company’s health.

  • avatar
    thegamper

    Pure speculation on my part, but I would think as more luxury automakers get EV’s to market with similar range, performance but with more traditional maintenance networks and reliability similar to ICE vehicles, Tesla may lose a lot of appeal to customers and investors alike.

    I could totally see Tesla get gobbled up by a major automaker.

  • avatar
    stingray65

    Very interesting analysis of the future of EVs as evidenced by the lack of new capacity and low prices for EV battery commodities.

    https://autosandeconomics.blogspot.com/2019/02/a-disconnect-electric-vehicles-and.html

  • avatar
    Rick Astley

    The tried and true method for Tesla advancement is built on the spines of American taxpayers.

    Clearly what is needed is for the taxpayer to get on their knees in front of Elon and go down on his rod of profit. A few hundred million taxpayer dollars to shore up the battery production should be just what the Dr. called for.

    Give Elon an administrative “finders fee” of 3%, and siphon off another 7% of the taxpayer funds to pay off some pertinent politicians to ensure the $7,500 Federal tax credit remains, and that the milk cart of selling CAFE credits goes another decade and you’ve got a solid business model that I would love to invest in!

    The only people who can and will suffer are the lowly taxpayers and the meek. The way god intended.

  • avatar
    EBFlex

    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.

    • 0 avatar
      SuperCarEnthusiast

      Elon Musk has built Ebay, Paypal, SpaceX and a couple of less known companies already! He has two master degrees in engineering and real business record of success!

      • 0 avatar
        JimZ

        “He has two master degrees in engineering”

        no he does not. he has undergrad degrees in Economics and Physics. He has no Masters degree in ANYTHING.

        why do you people have to lie like this?

      • 0 avatar
        stuki

        You weren’t at neither Ebay, Paypal nor SpaceX to watch him “build” any of them first hand, were you?

        Musk is exactly the right front man for Tesla. SpaceX too. Both companies were funded on nothing but “hope and change,” to put it that way. Sometimes you win at Russian Roulette, but most of the time things don’t go so well. Leading far and away most people, to simply abstain from playing that particular game in the first place.

        Which is why it takes a certain kind of, easy to criticize but hard to replicate, nutzo; to build the kind of reality distortion field required to give others the space and resources to do the actual creation of such completely unrealistic long shots.

        • 0 avatar
          JimZ

          SpaceX is working so well because it’s run by someone (Gwynne Shotwell) who has discipline and good sense, and the unique ability to tell Elon to keep his damn hands off of it.

      • 0 avatar
        Higheriq

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

    • 0 avatar
      SPPPP

      This seems a little alarmist to me. Panasonic doesn’t want to invest another BILLION dollars to expand the Gigafactory right now, because the current capacity is enough for now and for the next year at least. That seems perfectly reasonable.

      While I think that Tesla as presently constructed is doomed, this bit of news does not add to my concern one bit.

  • avatar
    bullnuke

    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!


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