TOKYO/BENGALURU (Reuters) – Panasonic Corp and Tesla Inc are holding off on further investment in the U.S. electric carmaker’s Nevada Gigafactory while they squeeze more out of existing resources and study market demand, the companies said on Thursday.
FILE PHOTO: A logo of Panasonic Corp is pictured at the CEATEC JAPAN 2017 (Combined Exhibition of Advanced Technologies) at the Makuhari Messe in Chiba, Japan, October 2, 2017. REUTERS/Toru Hanai/File Photo
The two companies were responding to a report by Japan’s Nikkei that said they had frozen previous plans to raise the capacity of the plant, which supplies battery packs for Tesla cars.
Tesla, whose shares fell nearly 3 percent in early trading, said it would continue to invest in the Nevada plant as need be but believed more output could be gained from its existing resources than previously thought.
Giving no details of its sources, Nikkei reported here that financial issues had led the companies to rethink plans to expand the capacity of Gigafactory 1 by another 50 percent next year.
The paper said the companies had already together invested $4.5 billion in the facility and had been planning to expand the plant’s capacity to the equivalent of 54 gigawatt hours (GWh) a year in 2020 from 35 GWh at present.
“Panasonic established a battery production capacity of 35GWh in Tesla’s Gigafactory 1 by the end of March 2019 in line with growing demand,” Japan-based Panasonic said in an email.
“Watching the demand situation, Panasonic will study additional investments over 35GWh in collaboration with Tesla.”
Neither company had made public detailed future development plans for the site, although Panasonic said here in July last year it would consider further investment in the Gigafactory if requested by the U.S. electric carmaker.
Panasonic is the exclusive battery cell supplier for Tesla, which in turn is Panasonic’s biggest EV battery client. In February, Tesla said it had agreed to buy U.S. energy storage company Maxwell Technologies Inc, sending shares in Panasonic lower.
Chief Executive Elon Musk also said in November the U.S. company would manufacture all its battery modules and packs at its new Shanghai factory and planned to diversify its sources.
The Nikkei report said Panasonic would also suspend its planned investment in Tesla’s new Shanghai plant and would instead provide technical support and a small number of batteries from the Gigafactory.
The Japanese company has said only that it was studying various possibilities with regards to the plant.
Lower-than-expected car deliveries by Tesla in the first quarter spooked stock and bond investors earlier this month, adding to Wall Street’s concern about its future cashflow.
Tesla is expected to report first-quarter earnings on April 24.
Reporting by Vibhuti Sharma in Bengaluru; editing by Patrick Graham and Anil D’Silva