Panasonic To Raise $3.9 Billion To Accelerate Gigafactory Investment

Tesla

AUG 13 2016 BY ERIC LOVEDAY 39

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Panasonic 18650 High Capacity Lithium Batteries For Model S And X

Panasonic 18650 High Capacity Lithium Batteries For Model S And X

Panasonic’s senior managing director, Hideaki Kawai, made a very brief statement to the press recently.

According to Kawai, Panasonic is seeking to raise up to $3.86 billion in corporate bonds to push forwards its efforts at the Tesla Gigfactory.

Panasonic hopes that by raising the additional funds, it’ll be able to keep up with Tesla’s aggressive pace to bring the Model 3 to production by mid- to late 2017.

Quoting Kawai:

“In the near term, strategic investment (from the money raised) would be mostly in Tesla’s Gigafactory. There is a need to speed up investment.”

Tesla itself has recently increased the workforce at the Gigfactory as it races to stay on track for its own ambitious goals.

Source: Reuters

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39 Comments on "Panasonic To Raise $3.9 Billion To Accelerate Gigafactory Investment"

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Quite a different level of commitment from Panasonic now, it seems, since news stories had them as not being very committed to this growth, just 12-18 months back! So, this is very good news, and a good sign! I do notice it is not an offers of shares in the company, but a bond, or a debt offer, which has leading payment priority to the bond holders. It also means, that after the current line is up and running, making the new Tesla 21-70 cells, they will have the funds, if this raise is successful, to install the next line just as soon as Tesla has the next 4 units of the building ready! That could be as early as December, 2016, or maybe as late as April, 2017! Since the first products using the Gigafactory 1 Cells, will be the Energy Storage items, like Powerwall, for home units, and also the larger Commercial units, it is clear that Tesla wants to get those products in full swing, by the time they start producing the Model 3, even if they don’t have enough cell production for car and storage, since storage got the lead, they may be able to slow… Read more »

Tesla, dragging Panasonic kicking and screaming, to high profitability.

Ah, those “news” stories where just rumor mongering from interested Tesla critics. They had no basis in fact.

Hmm, I don’t agree. I think it’s been pretty obvious for years that Tesla has been trying to get Panasonic to invest more and/or faster in ramping up battery production. In fact, I’ve been rather shocked at Elon/Tesla’s strong-arm tactics in putting pressure on Panasonic, by for example publicly, more than once, courting Samsung as a secondary battery supplier.

It’s certainly not a “rumor” that Panasonic refused to fully commit to their half of funding the Gigafactory. Panasonic said they would provide funding for the Gigafactory only in stages, with a reassessment at each stage. In other words, it’s the “our investment is dependent on you meeting certain milestones” partnership arrangement. Nothing at all wrong with that; in fact that’s prudent business arrangement. But that did rather hamstring Tesla for making future plans, as it meant Tesla couldn’t be sure production at the Gigafactory would be ramped up as fast as they planned.

Now it looks like Panasonic has fully committed, so it’s full steam ahead!

Go Tesla!

It would only hamstring Tesla if they couldn’t be sure about meeting the required milestones. So in a sense it would only hold them back if they were already held back by some other problems. Doestn’t seem like much of an argument that Panasonic has slowed them down to me.

Still, this does appear to be an indication Panasonic is feeling much more confident about the project, and that is of course very positive.

If Tesla actually manages to meet, or get within 80%, of their incredibly ambitious production plans for Model 3 before, say, mid-2018, it will doubtless force everyone else to up their ambitions as well. It is all very excellent, except for the largely unimportant secondhand value of my LEAF!

Ah, no…

Panasonic’s investment can only start near when the inside of the Gigafactory is completed sufficiently. Therefore, during 2014 and most of 2015, Panasonic could not invest much. The certificate of occupancy was not granted until the fall of 2015. As a result, the investment thus far is $128 million through Q1, 2016.

That is not the same thing as a lack of commitment… rather, it is about the timing of commitment. And the original commitment was for the original Gigafactory capacity. And now, at 3x the capacity, Panasonic is talking about the need to accelerate.

Tesla critics have been painting the Panasonic investment level as something more tepid than it was… Panasonic could not install machinery into a building that doesn’t exist, or doesn’t really have an inside yet.

Tech01x, you seem to be forgetting that Tesla was openly seeking other partners for the Gigafactory. If Panasonic had fully committed to funding its half of the operations, then Tesla wouldn’t have needed to look elsewhere. I’ll quote from a March 2014 article at Charged Electric Vehicles Magazine website, and let our gentle readers judge for themselves: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Pour the Champagne back into the bottle for now –- reports that Panasonic had committed to investing a bundle in Tesla’s Gigafactory turn out to have been premature. President Kazuhiro Tsuga told reporters in Tokyo this week that the company plans to move cautiously to reduce its risk. “Our approach is to make investments step by step,” Tsuga said. “Elon plans to produce more affordable models besides Model S, and I understand his thinking and would like to cooperate as much as we can. But the investment risk is definitely larger.” Building the gargantuan battery plant, which is critical to Tesla’s plans to produce a mass-market EV, may require as much as $5 billion. Tesla has already raised about $2 billion in a convertible bond sale, and hopes to tap partners for much of the rest. Elon Musk has said Panasonic may… Read more »
Yes, they need additional partners. But Panasonic is by far the biggest partner. And again, Panasonic’s communications to their shareholders is basically, don’t worry, it’s not like we’re dropping $2 billion all at once. After all, they bled a lot of red ink with Sanyo’s plants in 2011/2012. They are were recently in the middle of their own turnaround. You also do have to listen to way Japanese executives talk versus American ones. The language utilized is very different. The Gigafactory was always designed to be built in phases, with each phase roughly the size of Panasonic’s Suminoe plant in Osaka, Japan that supplies cells for the Model S and X. So they can always slow down the build out to full capacity if demand did not materialize. The original Gigafactory build plan was in stages, so Panasonic’s remarks are consistent with the original plan. If you look at the amount that Panasonic committed before the Model 3 unveiling, it was $1.6 billion dollars. That almost the entire $2 billion original partnership level. Except that we now know that each phase is 3x the original expectations. So now the new rhetoric is to commit most of the $1.5 to $1.6… Read more »

Here’s an InsideEVs article from 2 years ago, specifying that Panasonic had initially committed to only $200 million to the Gigafactory project:

http://insideevs.com/panasonic-sign-gigafactory-battery-deal-tesla-month/

This latest news shows quite a difference!

Although I believe Panasonic are committing to investing more than $US1.6 billion in the Gigafactory, they did not actually say so.
They said “In the near term, strategic investment (from the money raised) would be mostly in Tesla’s Gigafactory. There is a need to speed up investment.”
This could mean that in the near term they invest $US2 billion in total, $US1.1 billion of which goes to the gigafactory. In the long term the remaining $US1.9 billion goes elsewhere.
I have not been able to find any statement from Panasonic that they are going to invest more than the previously stated $US1.6 billion, and are simply bringing forward the spending of their original commitment.

Do they have security of supply for the lithium Carbonate they will require? Will some of this capital raise go towards securing their supply, for example direct investment in a mine?

Tesla secured lithium supply a while back. There was even talk of a second supply being secured. All negotiated and signed before the price of lithium spiked.
Keep in mind that lithium batteries have very little lithium in them.

Some sources report that Model S has 12-15 kg of lithium. Lithium carbonate has 18.8% of lithium content. At $20,000/ton of carbonate it may reach close to couple of thousand of dollars per car. Although I don’t think such high prices would keep up for long, as at such price you can just use sea water for lithium production.

Those “sources” claiming 12-15 kg of Li per M3 are incorrect, that anyone with rudimentary knowledge about batteries can easily identify as not being true. NCA, which will most likely be the cathode active material in the Model 3 incorporates approx. 6.4 wt% of Li. Let’s assume that the battery pack of the Model 3 holds a rated capacity of 60 kWh (might be even less). That requires less than 93 kg of NCA per car. That’s less than 6 kg of Lithium, not 12-15 (not even the new 100 kWh packs hold that much). Besides the fact that NCA is usually made from LiOH instead of Li-carbonate, your own calculation is also incorrect. Considering a price hike from 6000$ per metric ton to 20000$ per metric ton for a product that you need around 64 kg of (the incorrect 12 kg at 18.8%) results in additional cost of less than 900$, which I believe is less than “thousands of dollars per car”. In reality it would be 450$ (6 kg instead of 12) but it won’t come to that, as one can bet that Tesla has negotiated long term supply contracts for the LiOH. Only companies that did not… Read more »

What exactly is your source for that “6.4 wt% of Li”? Without a source or full calculation it sounds as baseless claim.
15 kg / 18.8% is 79.78 kg, and at $20/kg it is close to $2,000.

I’ve heard that Panasonic uses lithium hydroxide and not lithium carbonate in their NCA cells. You can convert one to the other but it requires a plant to do that.

Anyone who is trying to tell you that there is a shortage in the supply of lithium or lithium ore, is trying to sell you some speculative mineral exploration stocks.

If you’re gonna worry about a shortage of raw materials for li-ion batteries, worry about cobalt. It looks likely that battery makers will have to start using alternatives within a few years, or else figure out how to make batteries with far less cobalt, as production of li-ion batteries ramps up rapidly and the available supply of cobalt is used up.

Fortunately, various alternatives to using cobalt are already in the R&D stage.

Alarmism over a shortage of a certain mineral or element is usually just that; alarmism. Industries react to shortages in materials not by wringing their hands, nor by biting the bullet and paying sky-high prices for something in short supply, but by finding alternatives that aren’t in short supply and aren’t as costly.

http://www.greentechmedia.com/articles/read/Can-Cobalt-Supplies-Scale-With-Massive-EV-Market-Growth

It is very dumb article when author uses word “byproduct” for cobalt, and then talks about demand raising supply. Nobody cares about demand for cobalt when nickel or copper miners receive only small fraction of their income from cobalt byproduct. No byproduct reserves are relevant when responding to cobalt demand. Only 3% of cobalt supply is from cobalt only operations, the rest is giveaway from nickel and copper mining. Nickel and copper demand define what amount of cobalt will be available for battery makers, and this demand may be completely different from cobalt demand.
investorintel.com/technology-metals-intel/lithium-ion-batteries-the-cobalt-cliff-is-upon-us/

zzzzzzzzzz said:

“Only 3% of cobalt supply is from cobalt only operations…”

Or to look at it in a positive light, instead of the negative FUD spin you’re trying to put on it:

We’re already getting 3% of the world’s supply of cobalt from mines specifically opened to mine cobalt, instead of that cobalt coming only as a byproduct of mining for other minerals.

Obviously as demand rises, that 3% will grow.

Since you’re insinuating otherwise, zzzzzzzzzz, it’s clear that you’re trying to sell us something. Smells like FUD to me.

Smells like you are high in dream world and don’t want to see reality. When reality gets on you, you invent conspiracy theories and look for enemies angry that somebody wakes you up.

My understanding is that Tesla has a supply agreement with Bacanora Minerals /REMMY, although the numbers are subject to a Non disclosure agreement. They are currently running a pilot processing plant only, producing up to 3 tonnes per hour at their Sonora Project, this will need significant investment in order to produce the required amounts of lithium over the next five years, so in short it could be that Panasonic and indeed Tesla will be looking to invest directly in the mine to secure their supply requirements.

It is called the Sonora lithium project .. $135 mill for 35k a year .. ROI 4 years !Ducks lining up .. According to Kawai, Panasonic is seeking to raise up to $3.86 billion in corporate bonds

Interesting that this update … http://www.marketwired.com/press-release/bacanora-provides-update-on-the-sonora-lithium-project-tsx-venture-bcn-2140293.htm … doesn’t mention any production numbers at all. On the other hand, Orocobre working in Argentina with a similarly sized area, potential output and Li2CO3 reserves *is* producing and at about 2.5kMt/quarter currently…

Kinda puts the stories from “Seeking Alpha” into proper perspective, i.e., BS.

You just wait. We’re about to bury Tesla. Remember you read it here first.

Still waiting…

I think your understanding is correct Frank. Bananora Lithium/REM is indeed in a contract with Tesla and have been producing lithium continuously since Jan.
Look forward to seeing who is indeed funding the mine.’ Unique Funding’

Intererested to know just how much lithium they have produced in their pilot plant to date. if they were managing 3 tons per hour continuously, then that would be a significant amount.

As a Tesla “fanboy”, I’m very glad to see that news! That would appear to be laying the last cornerstone in the foundation of Tesla being able to rapidly ramp up production of the Model ≡.

Panasonic has very obviously been reluctant to commit the capital investment Tesla has wanted them to for this project, so it’s great to see them finally commit. Oh, and that’s another side benefit of the 400k+ Model ≡ reservations: it has shown there is a real market there for an awful lot of battery packs, and therefore has lowered Panasonic’s view of how risky the Gigafactory’s investment is.

Today the perpetual Tesla FUDsters are crying, gnashing their teeth, tearing out their hair, and rending their clothes! Ah, schadenfreude… 😛

Well the last cornerstone is the $1.2B Tesla said they needed to upgrade the Fremont factory. Can Tesla do it – yes. Can they do it and have cars for sale 3rd quarter next year – no.

Will Tesla rapidly ramp up Model ≡ production over the next few years? Very probably yes.

Will Tesla ramp up production as fast as Elon’s latest, very aggressive projections? Very probably no.

We’ve come to expect Tesla to miss the top end of its guidance every year. But only miss by 10-15%. If Tesla can ramp up at only 15%, or even 25%, below guidance, that will be a very rapid ramp up in production indeed.

Very exciting and massive projects involving both Tesla and Panasonic. The ever growing and huge demand for Lithium from not only Tesla and Panasonic is likely to transform AIM listed lithium suppliers Bacanora and more so Rare Earth Minerals (REM), over coming months. REM has stakes in Lithium producers across the sector and is seeking to take larger stakes as the demand increases.

More Musk propaganda. 3.9 billion is the raised sum, not what Panasonic will invest into the factory. Factory may receive some 1.6 billion for Panasonic equipment, effectively leased by Tesla.

The quote is from a Panasonic VP.

$1.6 billion of equipment for the first 2 phases is a lot of equipment.

Yes, that is what I’m saying. 1.6 billion not 3.9. Panasonic has other things to do, not just Tesla alone.

More FUD from serial anti-Tesla Fudster zzzzzzz.

The fact of the matter is Tesla and Panasonic is full speed ahead on their plan to produce massive amounts of batteries and hundreds of thousands of compelling BEVs for which the demand has only been scratched thus far.

Read and weep shorters and haters!

No one has mentioned Graphite, sampling with Great Lakes Graphite out of Canada has been ongoing and they are about to commission their plant for production, anyone read into this or know more?

$1.6 Billion including phase 2. Only phase 1 is built. No shovel in ground for phase 2 yet. It is tesla, not panasonic dragging their feet here.

Panasonic have responded to an email I sent them that they are not intending to spend more than the original $US1.6 billion. That means that most of the $US3.9 billion is not going to the Gigafactory.