Tesla and Panasonic suspend investments in Gigafactory expansion, report says

Tesla’s stock (TSLA) fell early this morning after a questionable report stated that the automaker and its partner Panasonic have suspended their investments in the expansion at Gigafactory 1.

Gigafactory 1 in Nevada has become the largest battery factory in the world with an output of 35 GWh to support Tesla’s Model 3 and energy product production.

Tesla owns the factory, but Panasonic is in charge of battery cell production inside the plant.

The two companies planned to gradually increase production capacity at Gigafactory 1 to up to 105 GWh of battery cell production and 150 GWh of battery pack production in order to support Tesla’s growing business.

Now Nikkei, a respected Asian business publication, reports that Tesla and Panasonic have frozen their plans to expand at Gigafactory 1:

“Tesla and Panasonic are freezing plans to expand the capacity of their Gigafactory 1, the world’s largest EV battery plant, as concerns mount on Wall Street about weakening demand at Elon Musk’s car company.”

Panasonic was previously said to be in talks with Tesla to increase its investment at Gigafactory 1 beyond the 35 GWh capacity.

A Tesla spokesperson has reportedly commented on Nikkei’s report:

“We will of course continue to make new investments in Gigafactory 1, as needed,”

Update: In a comment to Electrek, Tesla exapnded:

“We will of course continue to make new investments in Gigafactory 1, as needed. However, we think there is far more output to be gained from improving existing production equipment than was previously estimated.”

Furthermore, Nikkei also reports that Panasonic is also suspending investments in Tesla’s new Shanghai Gigafactory:

“Panasonic will also suspend its planned investment in Tesla’s integrated automotive battery and EV plant in Shanghai. Instead, it will provide technical support and a small number of batteries from the Gigafactory. Tesla is committed to buying batteries for the cars built at the Shanghai factory from a number of makers.”

Tesla’s stock fell by more than 4% in pre-market trading following the release of this report.

Electrek’s Take

I called this report questionable for a few reasons.

Nikkei is generally a respected publication and they do seem to often have good sources, especially in the Asian business world and specifically in Japan, where Panasonic is based.

But in this case, they don’t even cite sources and state everything as a matter of fact.

Normally, when you are introducing new information, you cite sources even if those sources are anonymous. They didn’t do that here for some unknown reason.

Also, the report states that Panasonic is suspending a planned investment in Gigafactory 3 in Shanghai, but we didn’t even know that they planned to invest in Gigafactory 3.

Tesla has yet to announce any partner for Gigafactory 3 and they indicated that they would first focus on vehicle production and they will source cells from outside manufacturers at first.

Therefore, I find this part of the report especially suspicious.

I still think there might still be something in there, especially considering Nikkei had inside sources at Panasonic in the past, but I would take the whole thing with a grain of salt for now.

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