Panasonic would consider further investments in Tesla’s Gigafactory if requested by the U.S. electric vehicle maker
According to CNN, Panasonic would consider upping the ante on the Tesla Gigafactory partnership. The willingness to further invest into the partnership with the U.S. electric vehicle maker was revealed on Monday by an executive at the Japanese conglomerate and it comes just days after Elon Musk, the CEO of Tesla Motors, revealed on Twitter that the company achieved a weekly production rate of 7,000 Tesla vehicles in seven days, 5,000 of which were Tesla Model 3 electric vehicles.
“We would of course consider additional investment if we are requested to do so,” Yoshio Ito, chief of Panasonic’s automotive business, said at a media roundtable, responding to a question about the possibility of further investment, given the chance.
The factory, on which construction started in 2013, has already grown into one of the biggest battery production facilities on the planet. The annual production of the Gigafactory is reported to be over 20 GWh. Consequently, with the ramp up in the Model 3 production rates and the need for additional battery packs, it seems both Tesla and Panasonic are eying a factory expansion. After all, just to meet Tesla’s ambitions next year alone, they would have to more than double that production output. Musk also set a goal to produce a whopping 50 GWh of battery capacity by the year 2020 and they will need all the help they can get to achieve those numbers.
Panasonic Corporation, the Japanese tech giant, is a sole battery cell supplier for Tesla’s vehicles. The company – which already produces the custom 18650 li-ion cells in Japan for Tesla’s Model S and Model X vehicles – is further involved with Tesla in the Model 3 battery system. The Tesla Model 3 batteries – a custom 2170 li-ion cells solution – is co-developed with Tesla and produced at the Gigafactory 1 by the Japanese company. Currently, the total investment into the Gigafactory between Tesla and its partners have already exceeded $4 billion. Overall, Panasonic is contributing over $1 billion to fund the plant and Panasonic’s initial investment in the Gigafactory is almost complete.
Meanwhile, Tesla Motors has been burning cash all over the place. Most of it is due to the need to tool up their assembly lines and to fund future projects like its Model Y crossover sport utility vehicle. In reality, some worry that the company is spread too thin and that the cash flow problems – if persistent – will eventually hurt them deeply. If this metric of financial health is used to gauge the company’s success rate, things are not looking bright for the car maker. Tesla’s free cash flow – a metric of financial health – widened to negative $1 billion in its latest reporting quarter, up from negative $277 million three months prior. And this excludes costs of systems for its solar business.
While we’re staying positive about Tesla (as they are a pioneer in the EV market), it remains to be seen how much more money will Musk burn through to achieve the levels of production and sales that make the company stay afloat in the long run.