Tesla's Poor 1st Quarter Gives Battery Supplier Cold Feet

Daniel Fowler
April 14, 2019

While co-founder Elon Musk reiterated a forecast for 360,000 to 400,000 vehicle deliveries in 2019, investors remain cautious given its history of missing ambitious projections. Panasonic makes the cells that Telsa then assembles into battery packs.

The two companies had not made public any detailed investment plans for the site, although Panasonic said in July past year it would consider further investment in the Gigafactory if requested by the USA electric carmaker.

The companies plan to revisit their Gigafactory expansion plans in 2020 depending on Model 3 and Model Y sales at that time. This led to delays in meeting Tesla's production goals.

The auto manufacturer and battery manufacturer Panasonic put a plan for investments in further expansion of the so-called Gigafactory 1 put on hold. The report claimed that Panasonic froze a decision to put another $900 million to $1.35 billion into the Nevada Gigafactory.

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Tesla is Panasonic's biggest battery client.

Panasonic and Tesla signed a deal in 2014 to bring the production of Panasonic batteries for Tesla products to Tesla's own Gigafactory - which opened two years later. Shares were punished last week following disappointing first-quarter vehicle deliveries. However, Tesla is now changing its focus to markets in Europe and China. "Both Tesla and Panasonic continue to invest substantial funds into Gigafactory". "However, we think there is far more output to be gained from improving existing production equipment than was previously estimated", the Tesla spokesman said. The existing production lines have been upgraded since the Gigafactory opening in 2016.

Tesla said the firm had chose to focus its investment on improving its existing production equipment, rather than trying to expand. Panasonic has said it will study further expansion of the Nevada plant and that it was considering possibilities for the Shanghai plant.

Panasonic is taking the additional step of suspending further investment in Tesla's new Gigafactory near Shanghai. The plan is said to have the capability to produce more than 500,000 electric vehicles per year. Recent reports, however, suggest that things aren't going exactly as planned.

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