Panasonic Will Consider Additional Tesla Gigafactory Funding If Asked

JUL 3 2018 BY VANJA KLJAIC 17

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.

Categories: Battery Tech, Tesla

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17 Comments on "Panasonic Will Consider Additional Tesla Gigafactory Funding If Asked"

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John

But wait, won’t that make the prospects for the shorters more difficult? What with Panasonic pledging to support the alleged boat anchor that’s called Tesla?

xm

Short Tesla Hedgers = Management to Lose Investor Money.
To run a Hedge Fund, you need a story.
You’re paid a fee, doesn’t matter of your story/theory works, just that you get the fee.

But, at some point, you lose investor faith that you actually know what you’re doing.
At which point, you close the fund and come up with a new story.

99% of Investors in hedge funds would make MORE MONEY in a simple Total Market Index Fund.

Terawatt
Investors in any fund that’s not an index fund will on average make less than they would in an index fund, because math. The latter follows the index, so the portfolio has the same return as the average of all the other investments in the market. But fees are much lower, since there’s no pretend expert to manage the fund. But people want to believe otherwise. I’ve lost count of the times I’ve seen simple demonstrations designed to show people beyond all reasonable doubt that “experts” don’t exist in this area, yet believe they will. In one, highly paid stock brokers competed against a bunch of cows whose stock picks were determined by where the cows chose to excrete, in another against non-experts throwing darts to pick stocks, with little to no hope of hitting any particular stock should they know what some of the symbols stood for. And an entire program in a popular tv show was dedicated to explaining how the fund manager corporations create the illusion of expertise (in short, set up many different funds, and take a lot of risk with clients’ money; after five years, a couple of them will have beat the market by… Read more »
scott

Yes, Panasonic is offering to expand production because Tesla is a “boat anchor”. Brilliant.

John

Um, I was being facetious Scott..

ffbj

Tesla did not achieve a 7k production rate in one week for the Model 3, as the article stares, that was for all Tesla models.

Good catch. Fixed

xm

Panasonic to Tesla: Force me to get richer.

David Green

The headline on this story is misleading. Panasonic is “open to investing”, meaning they will negotiate for terms that suit Panasonic…

Adjusted

Another Euro point of view

Maybe in terms that make it possible for Panasonic to provide cells to other car manufacturers would the opportunity arise. That would be a smart move as battery cells manufacturers (CATL, LG, Samsung, BYD) are breaking ground with new factories allover the world except in the US it seems.

antrik

You mean selling cells produced at the Gigafactory to other customers? That seems extremely unlikely, considering that the Gigafactory cells are custom-designed with Tesla.

(Also, Panasonic doesn’t seem to have had much luck with finding other customers for their automotive cells in recent years…)

David Green

Nobody seems to want cylindrical cells, but I am not sure the technical reasons, they seem great in the Model 3 pack.

scott

Cylindrical cells are very popular for stationary storage. Any of the Goal Zero lithium stuff, or Battle Born, use cylindrical cells.

antrik

Curiously, while none of the legacy makers want cylindrical cells, quite a lot of start-ups do… But they all seem to go with LG or Samsung. (And they have no actual production yet, or only in niche quantities; so they wouldn’t add any meaningful revenue at this point anyway.)

Panasonic also offers prismatic cells, though — and doesn’t seem to have much customers (if any?) for these either.

David Green

I think Panasonic is setting themselves up for one big customer…. Toyota, who will acquire Panasonic in the next year. Many in the automotive industry have been rumoring this for a while, must be something to it.

G2

Got any references or links for a Toyota buyout of Panasonic?