Panasonic Expected to Invest Over $1 Billion In Tesla Battery Giga Factory


Reuters is reporting, via Nikkei, that Panasonic is inviting several key Japanese materials suppliers to join it in investing upwards of 100 billion yen (nearly $1 billion USD) in Tesla Motors’ battery giga factory.

Panasonic 18650 High Capacity Lithium Batteries

Panasonic 18650 High Capacity Lithium Batteries

Key points from the Reuters article:

  • Giga factory to go on line in 2017 – Will take 2 to 3 years to build
  • Giga factory will “handle everything from processing raw materials to assembly, will produce small, lightweight batteries for Tesla and may also supply Toyota Motor Corp and other automakers.”
  • Panasonic is not the only player expected to invest in the giga factory
  • Giga factory will require up to $6 billion in capital to make it a reality

We expect the official giga factory announcement to come from Tesla Motors sometime this week.  Until then, this is the latest news on this game-changing battery factory.

Source: Reuters

Category: Battery TechTesla

Tags: , , ,

31 responses to "Panasonic Expected to Invest Over $1 Billion In Tesla Battery Giga Factory"
  1. Blind Guy says:

    Make it so!

  2. Schmeltz says:

    $6 Billion to build this thing!? WOW. Putting that in context, a large, modern car factory is said to cost between $1 and $2 Billion these days. So, this must be one whopper of a complex.

    1. Brian says:

      I hope they open it up for tours someday!

    2. Mikael says:

      If it’s supposed to manufacture as much or more batteries than the world is doing today then it will be one hell of a complex.

      The future is bright… 🙂

      1. Mint says:

        To put the financing cost into perspective, if $10/kWh went to paying off the financing cost, or ~$500 per next gen car, it would take 10-15 years to pay off (depending on final cost and cost of capital).

        That’s not too bad.

    3. Dr. Kenneth Noisewater says:

      Modern chip fabs run into the multi-billion range, and they’re all over the place..

  3. Anthony says:

    Six billion dollars is a ton of money. If Tesla wanted to issue new stock, they’d have to dilute current shareholders by 15% at current prices ($255/sh). I don’t think thats going to work – the May 2013 new stock was about 2% dilutive.

    So the money is going to have to come from outside sources. Not surprising Panasonic is investing $1B. But there is going to have to be a lot more outside investment. Hmm, which company has billions upon billions in the bank and who talked to Tesla last year… 😉

    1. gigglehertz says:

      I’m guessing they create a new company just for battery production.

      1. Nissan’s did that with Automotive Energy Supply Corporation (AESC).

    2. Anton Wahlman says:

      Presumably Tesla wouldn’t be the only shareholder in this new battery factory.

  4. ffbj says:

    Survey says Apple? But then again Google could give them money too, and the good old USA, to say nothing of incentives/tax breaks from the state they build it in. Financing should not be a problem, interest rates are incredibly low. The land itself could cost up to 100 million depending on where it is. My concept is it will be somewhere a bit removed from higher priced already infra-structured land. Sort of a Las Vegas, built in the empty desert, except for it will be a city for batteries, out in the desert powered by solar energy. A couple thousand acres of land. A Hoover Dam for the 21st century, later to be featured on Modern Marvels.

    1. arne-nl says:

      Built in the empty desert sounds cheap, but where then does the workforce come from?

  5. Aaron says:

    Someone suggested Samsung will be the other partner, but I don’t think that will happen. The Japanese and Koreans aren’t the best of friends.

  6. Spin says:

    Apple, Toyota, GM, Ford, etc.

    Large corporations will be standing in line to get in on this deal.

    1. Apple, probably. GM and legacy oil based economic companies, no way.

  7. DocDragon says:

    That is some *serious* money just to produce batteries!

    Looking at the photo of the battery pack, those are older NCR18650A (3.1Ah). Panasonic is already producing the newer NCR18650B (3.4Ah), which are available on eBay. 😉

    1. Jay Cole says:

      Going to swap out that pic in the story to the cells they showed off at Panasonic/Tesla booth at the Tokyo Motor Show instead…be a little more timely.

  8. Chris O says:

    6 Billion is an incredible amount of money to invest in production capacity for battery tech that might well be obsolete before that sort of investment pays off. I think this sort of commitment will make Tesla very vulnerable.

    1. Anthony says:

      The goal of this factory isn’t to build the best batteries in the world, the goal is to build the cheapest batteries, on a $/kWh basis, suitable for electric cars. If Tesla gets the cost down to $150 or even $125/kWh, who cares if they’re the best, as long as they’re suitable for EVs (cycle life, calendar life, power requirements, energy density, etc.).

      Besides, the entire $6B isn’t going into the manufacturing process and tooling.

      You have to figure that some of the investment is going to be the land, building, infrastructure (roads, water, power, sewer, data, etc.), as well as the solar panels that will be used to offset energy consumption of the plant. That’s likely going to be in the hundreds of millions of dollars range if they build out somewhere in northern Nevada or New Mexico.

      Beyond this, the capacity may not be added in one fell swoop. We might see a capacity for 200K packs initially, but then additions to the factory over the next two years would ramp it up to ultimate capacity of 500K packs per year. And its entirely likely you could have different battery technologies (e.g Li-Ion NCA, Li-S, etc.) being produced under one roof.

      1. Chris O says:

        It’s mostly speculation for us mere mortals but this investment needs to be pretty flexible lest it doesn’t become a dangerous burden for Tesla.

    2. krona2k says:

      I don’t think a different battery chemistry makes a factory obsolete, since it sounds like they’re planning on doing the entire process from raw materials to finished product there should be plenty of life in much of the investment. Or do you mean some other tech than batteries is going to come along?

      1. Chris O says:

        I do wonder how innovation proof this investment is. If new battery tech comes along that makes the sort of technology this factory will be initially equipped for obsolete how much of the initial investment is still going to have value? For instance: I don’t think the factory buildings and site account for a substantial part of an $6 billion investment. The factory needs to turn out 10 million battery packs for even the cost of this initial investment per vehicle to come down to $600 per car. I hope the sort of battery tech this factory is capable of turning out offers that kind of market potential before it has to be written off.

        1. arne-nl says:

          You’re worrying too much. The fundamental processes do not differ. Just as new car technology doesn’t make a manufacturing plant obsolete from one day to the next, the basic method of building a battery doesn’t change when you use different electrolytes or a new type of separator.

          With Panasonic in the deal, you have all the expertise you’ll ever need to make this production facility flexible enough to produce future batteries too.

    3. Rob Stark says:

      We know a couple of things

      1) Elon Musk is a complete moron.

      2) Wall Street houses putting price targets on TSLA at $300 plus per share are complete morons.

      3) Panasonic and suppliers are completely moronic when it comes to manufacturing batteries. They have no plan for the next wave of innovation. There is no built-in flexibility possible and no potential to upgrades.

      4) We know rechargeable batteries have had rapid cycle/commercialization development over the last hundred years. That is why other forms of energy storage were made obsolete decades ago.

      5) The next innovation in batteries will be the last. So a Tesla competitor will worry free invest $10B in the next generation gigafactory, destroy Tesla market share, and never worry about 3rd generation gigafactory. No brainer.

      6) You should never invest in a business today because there MIGHT be a better business opportunity tomorrow.

  9. Anthony says:

    Well I guess we have our answer on how Tesla will finance (its part) of the Tesla Gigafactory…

    $1.6B convertible debt notes, 800M due 2019, 800M due 2021.

  10. Ryan says:

    Someone at Tesla sure likes Panasonic. I’d consider and utilize all makers.

    1. arne-nl says:

      Is this game over for the hydrogen car?

      1. Oh, no, hydrogen is going to make fantastic extremely low volume CARB-ZEV compliance cars for manufacturers like Toyota through 2017.

        Bold prediction: in 2018, the CARB-ZEV credit value of a hydrogen car and an electric car become the same 3 credits per car. Since hydrogen loses it’s advantage, I predict that Toyota sells a rebadged Tesla Model E, as will Mercedes Benz starting 2018 model year.

        Unlike the Toyota Rav4 EV and Mercedes B-Class ED, both of which cost their respective manufacturer beau coup money for CARB-ZEV compliance, plus they have to get their hands dirty building them, with a Tesla Model E, they can actually turn a profit with the compliance program and not build anything!!!!

        2018, folks. You heard it here first. Now, what to name them:

        Toyota – Suprev
        Mercedes – SL-EV

        1. Time to review what the “legacy” oil burning auto manufactures are planning for 2018:

          Auto manufacturer’s Oct 19, 2012 request to EPA for waiver from CARB:

          “It is highly unlikely that the required infrastructure and the level of consumer demand for ZEVs will be sufficient by MY2018 in either California or in the individual Section 177 States to support the ZEV sales requirements mandated by CARB. EPA should therefore deny, at the present time, California’s waiver request for the ZEV program for these model years. During the interim, Global Automakers and the Alliance believe that California and EPA, with full auto industry participation, should implement a review for the ZEV program similar to the mid-term review process adopted under the federal GHG and CAFE regulations for MYs2017 through 2025.”

          And the legacy oil companies nightmare:

          CARB state coalition – California, New York, Massachusetts, Oregon, Vermont, Maryland, Connecticut and Rhode Island. The eight-state coalition will push for the numerical target by 2025, more than doubling California’s 1.5-million-car goal. While California buyers of plug-in hybrids, battery and hydrogen fuel-cell autos get incentives such as rebates, the seven other states didn’t announce specific enticements.

          The eight states combined account for 23 percent of U.S. vehicle sales, according to California’s Air Resources Board.

  11. Josephus says:

    I’m missing why Panasonic wants to invest in a partner who is trying to produce their own batteries, batteries that would otherwise need to come from Panasonic?