Tesla Gigafactory expansion on hold as partner Panasonic eyes EV demand

Tesla and Panasonic hit the brakes on battery expansion

Tesla and Panasonic hit the brakes on battery expansion

Panasonic Corp is studying further investments in battery production at its Gigafactory venture with Tesla Inc, the company said, responding to a media report that the two companies had frozen previous plans.

Tesla shares have dropped in recent weeks, falling by almost five percent to $263.20 per share in pre-market trading in the United States.

Tesla is disputing reports it is cutting investment in the Gigafactory east of Sparks. Tesla has seen a record decline in deliveries during the quarter ending in March, which has led to fears about lack of demand for the company's Model 3 sedan.

Tesla and its partner Panasonic are scrapping plans to upgrade the capacity of Tesla's massive Nevada Gigafactory according to a report out of Japan that surfaced this morning. One would assume that any automaker buying Panasonic batteries would receive the same level of support.

The two companies had not made public any detailed investment plans for the site, although Panasonic said in July a year ago it would consider further investment in the Gigafactory if requested by the U.S. electric carmaker. Tesla further elaborated to Electrek that the company believes "there is far more output to be gained from improving existing production equipment than was previously estimated".

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Panasonic commented on the decision stating: "Panasonic will study additional investments over 35 GWh in collaboration with Tesla".

According to Tesla, in the middle of 2018, battery production at Gigafactory 1 reached an annualized rate of around 20 GWh, making it the highest-volume battery plant in the world.

For now, it appears that Tesla will diversify its battery suppliers, including producers in China, and its partnership with Panasonic may be renewed in 2020, sometime closer to expected production of the Model Y crossover.

Its indeed worrying if Panasonic knows something the rest of us doesn't.

The report about moderated expansion plans for Gigafactory 1 comes a week after Tesla reported lackluster vehicle deliveries numbers for the first quarter of 2019. Of course, we will have same-day coverage of Tesla's 1Q 2019 results right here!

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