Panasonic Drops Money Losing Divisions to Focus Almost Solely on Battery Cells for Tesla Motors

4 years ago by Eric Loveday 26

Tesla Model S Consumes Lots of Battery Cells -  Like 7,000-Plus

Tesla Model S Consumes Lots of Battery Cells – Like 7,000-Plus Per Vehicle

A few days ago, Tesla Motors and Panasonic released this joint announcement:

Panasonic Cells Packed in Old School Tesla Housing.

Panasonic Cells Packed in Old School Tesla Housing.

“Panasonic Corporation and Tesla Motors today announced that the two companies have reached an agreement in which Panasonic will expand its supply of automotive-grade lithium-ion battery cells to Tesla. With this agreement, the two companies update and expand their 2011 arrangement to now supply nearly 2 billion cells over the course of four years. The lithium-ion battery cells purchased from Panasonic will be used to power the award winning Model S as well as Model X, a performance utility vehicle that is scheduled to go into production by the end of 2014.”

A win for Tesla…yes.

But what’s up with Panasonic?

Well, to understand what’s going on at Panasonic, we have to look at the BIG picture.

Now, we’re not about to get into the nitty-gritty specifics here, as that’s not the point.  However, pointing out Panasonic’s intense focus on Tesla is what we’ll zero in on.

Panasonic 18650 High Capacity Lithium Batteries

Panasonic 18650 High Capacity Lithium Batteries

By this time next year, Panasonic will have exited the plasma TV business forever and slashed its chip-making division at least in half.  Furthermore, Panasonic will idle some of its factories responsible for plasma screen and chip-making, while converting others over for automotive battery cell production.

Additionally, Panasonic will dwindle down its “small battery” workforce, while simultaneously shifting some of those employees to automotive battery cell production.

The BIG picture says it’s all or nothing for Panasonic. If this deal with Tesla were to go sour, then Panasonic would almost surely go bankrupt.  In fact, before Tesla stepped in, Panasonic had huge financial struggles.

In the future, it seems Panasonic’s sole focus will be on automotive-grade battery cell production.  Fortunately for Panasonic, it seems Tesla is willing to gobble up every battery cell that Panasonic produces.

Tesla and Panasonic are currently tied at the hip.  But remember, Tesla is eying deals with other cell manufacturers, so Panasonic may not be in the position to barter.

It’s all or nothing…Panasonic either wins BIG time…or loses nearly everything.

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26 responses to "Panasonic Drops Money Losing Divisions to Focus Almost Solely on Battery Cells for Tesla Motors"

  1. David Murray says:

    Hasn’t Panasonic also always produced the NiMH cells for Toyota’s hybrids?

    1. kdawg says:

      Here’s my battery info-graphic. Several companies using Panasonic.

      1. Pedro says:

        Volkswagen e-UP and e-Golf use Samsung cells with the battery pack made by Bosch. Honda Fit EV uses Toshiba’s SCiB cells not Yuasa. The third generation Smart ED no longer uses Tesla’s power-train and Panasonic’s cells.

        1. kdawg says:

          Do you have links for the Volkswagen/Smart ED info?

          Also, from what I read, GS Yuasa provides Honda their batteries.
          http://www.plugincars.com/gs-yuasa-triple-lithium-production-honda-113107.html.

      2. Josh Bryant says:

        Third Gen Smart ED switched away from Tesla drivetrain, so no Panasonic supply on the battery. My understanding is the battery for the current Smart ED is from their consortium company that I cannot remember the name of right now.

        1. Jay Cole says:

          Li-Tec – it’s a joint venture between Daimler and Evonik. And it’s for sale.

          Daimler hinted it could be worth a billion Euros at the time they announced their intention to off-load it…that was 5 months ago (and it’s still for sale) so we are guessing that price might have been a touch high.

          http://insideevs.com/daimler-seeks-buyer-for-unsuccesful-lithium-ion-battery-joint-venture-li-tec-battery/

        2. kdawg says:

          I’ll update the info-graphic when I get home tonight. Don’t have the file here at work.

          Anyone know where Volvo gets their batteries from?

    2. ItsNotAboutTheMoney says:

      It was. Toyota had a joint venture. When Panasonic bought Sanyo they divested their share in the plant to alleviate the monopoly position.

      Toyota buys lithium cells from Panasonic.

  2. zilm says:

    There is a great chance that examining deals from other manufacturers were just game to get best price from Panasonic.

  3. Dr. Kenneth Noisewater says:

    Good way to get the Japanese government invested in EVs, have one of their Zaibatsu (Matsushita) depend this heavily on them..

  4. Anthony says:

    Panasonic still has their Solar power unit they acquired from Sanyo a few years ago!

    http://panasonic.net/ecosolutions/solar/index.html

  5. Ocean Railroader says:

    This is a really a monument to Tesla crashing it’s weight around.in that as Tesla gets stronger over the next few years it’s going to start fighting with more powerful things out there such as OPEC along with several regions smog problems. It could very well do heavy damage to the Global Ethanol Industry which in turn will affect cattle feed prices.

    1. philba says:

      Your point doesn’t make sense to me. How is OPEC going to “fight” Tesla? And what does smog have to with it? (centralized power distribution has a better chance of becoming cleaner than millions of ICEs) Also, the “global ethanol industry” really should die as it doesn’t really solve much of a problem and pushes food prices higher.

    2. Priusmaniac says:

      Actually with or without EV’s we are going to have to replace all the Petro chemical industry that supplies the plastics, the chemicals and the pharmaceutics with a bio chemical industry. This essentially means replacing petrol with bioethanol, the most convenient starting material to produce replacements for the oil based plastics, chemicals and pharmaceutics. So that ethanol is going to be needed and will be manufactured by second and third generation cellulosic process.
      Beside even if Elon doesn’t understand that yet, Ethanol will still have a role to play to replace the fossil fuel RP-1 in the Falcon 9 rocket so that it can become renewable and independent from oil.
      In cars too ethanol can play a role as a fuel for a range extender. It would by the way be much easier to obtain an economic car able to do 100 miles EV range and 400 miles overall range by using a 30 KWh battery associated with a bioethanol micro range extender of a Wankel type or of a Direct free piston type.

  6. GeorgeS says:

    what I want to know is how they are going to get the cost of these cells down even further. I ran across a fairly recent argonne paper on the subject that was pretty good. In the article it said that roughly 70% of the cost of the batteries is: materials and purchased items. Interesting to see how panasonic can drop the price on what seems to be out of their control.

    I suppose the only way to do it is to not purchase so many items from outside suppliers. This is what Tesla does and also Space X uses this technique. .

    1. Dave R says:

      Once you get the cost of a cell down close to material cost you basically have two options:

      1. Switch to cheaper materials.
      2. Use less material.

      What you see is that batteries are still continuing to get more energy dense – this means more energy with the same or less material.

      Tesla is using a very energy dense lithium chemistry in their Panasonic cells compared to what other EV/PHEV manufacturers are using, but this comes at the expense of the cells themselves being more volatile and prone to thermal runaway situations.

      Tesla believes that it has those issues under control by their unique battery pack packaging.

      1. Bill Howland says:

        Another cost-saving technique which I believe was implemented with the model s was a simplified assembly at the top of the battery….

  7. vdiv says:

    Crikey! What in the devil does 18650 mean?

    18mm diameter and 65mm length… but not quite, it’s ø18.25mm x 65.10mm or ø18.6mm x 65.2mm depending on who you ask, if the cell is bare or shrouded, or if the cell is new or not?!?

    Oh, and there aren’t just 18650 cells, there are NCR18650A and B?

    And is N for Ni or Nickel? Not quite, it is for NNP which stands for “Nickel oxide based New Platform”…

    Is CR for Cylindrical (vs prismatic or pouch)? Are A (3100mAh) and B (3400mAh) different generations and capacity?

    Is there by chance an NCR18650T (for Tesla)? 😉

    We need an EV battery primer, anyone?

    1. Josh Bryant says:

      Sounds like you just volunteered yourself for a write-up.

    2. Dave R says:

      For sure, Tesla isn’t using a standard 18650 cell. Your typical cell includes a safety circuit in it to prevent over discharge.

      Tesla’s cells don’t include that and the cap of the cell is simplified as well.

      Both of those changes reduce cost.

  8. Rick Danger says:

    I love my Panasonic plasma TV…

  9. pjwood says:

    Bargaining power can mean so much. At the EPA power plant hearing, today, people were talking about increasingly large utilities, increasingly focusing on natural gas generation. More nukes are being turned off than will be coming online, all as the bell tolls for coal. Tesla won’t be the only one who might gain, when those batteries have to go somewhere to get filled.

  10. The title is misleading… “Panasonic Drops Money Losing Divisions to Focus Almost Solely on Battery Cells for Tesla Motors”. Particularly the “to Focus Almost Solely on Battery Cells for Tesla Motors”.

    It s true Panasonic dropping Plasma screens, but is still developing 4k video (4096 resolution) displays. Also has many products in solar, LED lighting, consumer electronics, home energy management, and eco-focused home appliances. There is a business re-focus, but clearly ‘not solely’ on making cells for Tesla.

  11. Steven says:

    Yeah, I don’t like the idea of a single source supply chain. Remember A123 Systems? How wide and far have those ripples spread so far…

    If I were building electric cars, I’d want at least three suppliers who could provide between 50% and 110% of my forecasted needs. You never know when a natural disaster will knock out a supplier.

  12. Priusmaniac says:

    Apart from batteries, I hope Panasonic will keep developing their very effective U-Vacua insulation material. It is an ultra thin super insulation that can improve refrigerators but also provide thermal insulation for an EV car that translate in less heating and cooling energy and thus more range. U-Vacua is really fantastic and deserve more focus because of its potential.
    Here is a link to that material:
    http://www.panasonic.com/industrial/appliances-hvac-devices/vacuum-insulation/panel.aspx