The relationship between Tesla and Panasonic has been deteriorating the past few years, but they are apparently back to making money — boosting the relationship and even resulting in talks to expand battery production at Gigafactory Nevada.
The growth of Gigafactory 1 in Nevada has been impressive, and the factory quickly became the largest li-ion battery factory in the world. But earlier this year, Tesla said that Panasonic’s battery cell production was limiting Model 3 production.
Initially, Panasonic invested $1.6 billion in the factory to reach a battery cell production capacity of 35GWh.
The company had issues reaching the target, and according to recent reports, the Tesla-Panasonic relationship has hit hard times as Tesla is making moves to make its own batteries.
They were supposed to keep growing the factory, which Tesla said could eventually produce up to 105 GWh of battery cells and 150 GWh of battery packs in order to support Tesla’s growing business.
With Tesla making moves to produce its own batteries and Panasonic having a hard time ramping up, these plans for expansions have reportedly been put on hold.
However, we heard indications that Panasonic was still open to growing at Tesla Gigafactory late last year, and now it seems more likely than ever following new comments from the Japanese company’s leadership.
One of the biggest issues Panasonic had with the Tesla Gigafactory project is that the automaker was always pushing for lower prices on the Panasonic batteries, leading to the latter losing money on the product.
But on Monday, Panasonic CFO Hirokazu Umeda announced that their battery production at Tesla Gigafactory Nevada is finally profitable, or at least it was during the first quarter before they had to shut down production due to the pandemic.
Reuters reported today:
‘We are seeing strong demand from Tesla’ beyond the Nevada plant’s current capacity of 35 gigawatt hours per year, Panasonic chief financial officer Hirokazu Umeda told an earnings briefing on Monday. ‘We are in discussions right now’ about expanding the plant’s capacity, he said.
In recent talks, they had been talking about having the capacity to produce 54GWh of battery cells per year at Gigafactory Nevada.
The CFO also mentioned improving the performance of the cells:
We will be working to improve materials and technologies throughout this financial year.
Tesla and Panasonic have a long history of working together to improve the chemistry of the battery cells that the latter makes for the former.
Since I’ve been reporting a lot on Tesla’s plan to build its own batteries, a lot of people have been asking me what it means for Tesla’s relationship with Panasonic.
I think that Tesla and Panasonic will have always a relationship, but it will be less of an overall “battery partner” relationship and more of a typical supplier relationship.
Tesla will need to buy all the cells it can get from Panasonic for the foreseeable future.
Even by the time it can ramp up its own battery cell production, I believe that the battery cell demand from Tesla’s vehicle and stationary energy storage production will still greatly outpace its own battery cell production.
Whether we will ever see Panasonic produce 100GWh of battery per year at Gigafactory Nevada, I don’t know, but I do think it will ramp up from here.
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