Panasonic is expected to noticeably increase lithium-ion battery cell production for Tesla at the Gigafactory 1 site in Nevada, which is jointly operated with Tesla.

According to Nikkei Asia, the Japanese company has decided to increase battery production due to pressure from Tesla, its largest EV battery customer.

"Tesla recently told Panasonic that it would "buy as much as [Panasonic] can make," according to an executive at the Japanese manufacturer, hinting at Tesla's scramble to secure batteries in the increasingly competitive EV industry."

The plan for Panasonic Energy (an affiliate of Panasonic Holdings) is to add at the plant a 15th production line for 2170-type cylindrical battery cells, which Tesla uses in Model 3 and Model Y cars, as well as some other products.

That would increase the output by roughly 10 percent from the current level of 38-39 gigawatt-hours (GWh) annually. It means probably an additional 3-4 GWh, for 50,000+ additional electric cars. However, this work will take some time - one to two years, according to the report.

We don't know any official details, but Nikkei Asia's sources indicate that the part of the site operated by Panasonic is "already crammed," but they should be able to add one more production line (without expanding the building, as we understand).

It's worth noting that Tesla is expanding Gigafactory 1 through an investment of $3.6 billion, to handle its own production of all-new 4680-type cylindrical battery cells (100 GWh per year if not more) and Tesla Semi trucks (up to 50,000 annually).

It would mean that Panasonic's move to add a 15th line is just a side action to address the current demand for 2170-type batteries.

Tesla Giga Nevada: Expansion Plans

Tesla Giga Nevada: Expansion Plans

It's worth noting that the Inflation Reduction Act of 2022 (IRA) promotes local battery production (eligibility for the $7,500 federal tax credit incentive for electric cars, as well as a tax credit of $35/kWh of battery cells). Those are very strong incentives to convince businesses - even the cautious and reluctant players.

Panasonic Battery Plant In Kansas

Meanwhile, Panasonic is building an all-new factory of 2170-type cylindrical battery cells for electric vehicles in De Soto, Kansas ($4 billion and 30 GWh/year of initial output). This site is expected to supply various manufacturers, probably including Tesla.

A year ago it was anticipated that the factory will be for the all-new and larger 4680-type cylindrical battery cells for Tesla's next-generation models, but Panasonic delayed the commercialization of 4680-type and probably is focusing to bring to the market a solution that is in high demand, as soon as possible.

"Because of Tesla's increased demand, Panasonic has been forced to change its plan for the Kansas facility. "We were concentrating on Kansas and developing the new [4680] battery, but the IRA turned the tide," the executive said. "Tesla started saying to prioritize batteries that we can quickly increase in quantity.""

In the future, the site in Kansas might produce 4680-type battery cells as well. We know that Panasonic has a plan to expand its manufacturing capacity to 200 GWh annually (from about 49-51 GWh/year now). Roughly half of that number will be 4680-type cells.

Tesla's 4680-Type

Meanwhile, Tesla continues to develop/improve its in-house 4680-type cylindrical lithium-ion cells, which are produced at a pilot site in California and recently also at the Giga Texas plant.

Those batteries are currently used only in the entry-level Tesla Model Y AWD version but are expected to be used also in more and more versions and models (including the upcoming Tesla Cybertruck).

Tesla is working not only to increase production of this new battery type, but also to improve its performance and reduce costs. There are plenty of battery manufacturers that are also working on a 4680-type battery, or a similar type with a 46-mm diameter and various heights as there are other OEMs interested in larger cylindrical cells (BMW Group already signed on for 46xx in its new BEV platform).

Got a tip for us? Email: