Tesla still isn’t getting enough batteries from Panasonic

The supply of batteries manufactured by Panasonic remains the "fundamental restriction" in the production of Tesla products, the company said Thursday. The electric car maker is not getting enough batteries from the production lines that Panasonic operates in the Reno, Nevada Gigafactory of the automaker, to keep up with the amount of cars and energy storage products in the home that it wants to manufacture. However, the two companies believe that more batteries can be made using the equipment installed in the factory, Tesla said.

The statement reflects what the CEO, Elon Musk, told investors in a telephone conference on January 30, when he said that Tesla was "cellular." hungry for vehicle production, "and that he had to give up manufacturing his domestic energy products in order to keep pace with the Model 3 battery packs. And he shows that, despite suffering the" hell of production "and the "hell of delivery logistics", a long-standing problem still leads to the success of Model 3: the tension between what Tesla needs and what Panasonic can offer.

Tesla announced in 2014 that it signed an agreement with Panasonic to Take the battery manufacturer to the factory at Gigafactory, which opened in 2016. Instead of buying batteries made by Panasonic in Japan and shipping them around the world, the automaker wanted the cells to be manufactured inside the same building where he planned build the battery packs for their first mass-market electric car, the Model 3.

This vertical integration, combined with the massive scale that Tesla planned achieve in the Gigafactory It was supposed to help reduce costs to a "previously unattainable level in the production of cells and battery packs," said Tesla in its 2014 announcement. But the first year of production of Model 3 was plagued by the slow pace and the inconsistent quality of battery manufacture (and battery). That led to delays in Tesla's high production goals.

Today's statement came as part of a response to a couple of reports published by Nikkei Asian Review that suggest that Panasonic is supposedly changing its plans for two of Tesla's Gigafactories. Nikkei said Panasonic "froze" the decision to invest an additional $ 900 to $ 1.35 billion in Nevada Gigafactory with the goal of "reducing its dependence on the automaker." Tesla is Panasonic's largest customer for electricity. vehicle batteries, and the Japanese battery manufacturer had already suffered millions in losses due to the slower than expected acceleration in the production of the Model 3.

While the Model 3 eventually became the best-selling electric vehicle in the world in 2018 despite the company's problems, Tesla experienced a record drop in deliveries in the first quarter of 2019. The decline was due in part to the fact that the company shifted its focus away from North America and started sending 3 models to two new markets: Europe and China. But some Wall Street analysts and the company's skeptics also believe that the demand for Model 3 has run out in North America, in part because Tesla's cars are no longer eligible for the total federal tax credit for EV, and since the promised base of $ 35,000 The car version has not yet been shipped.

This potential problem with the demand, which Musk has denied is one of the reasons why Panasonic has cooled, according to Nikkei . The battery maker told Reuters that it is "[w] addressing the demand situation" and "will study additional investments" beyond the current capacity of Gigafactory.

Nikkei also reports that Panasonic has changed plans for the Gigafactory that is currently being built outside of Shanghai. Tesla began the construction of its first Chinese factory in January and plans to have production in operation by the end of 2019, as it is key to the company's goal of becoming a major presence in China.

But neither Tesla nor Panasonic have announced whether the Japanese battery manufacturer would manufacture or supply cells to the Shanghai factory. Tesla is in talks with two other Chinese battery manufacturers, Lishen and Contemporary Amperex Technology Co. Limited, or CATL, to provide cells to the Shanghai factory.

Still, Nikkei reported Thursday that Panasonic will "suspend its planned investment in Tesla's integrated plant for automotive batteries and electric vehicles in Shanghai," and instead "provide technical support and a small amount of Gigafactory batteries ". No sources were mentioned for these plans in the report.

A Tesla spokesperson denied the report that Panasonic plans to "freeze" the investment in Nevada Gigafactory, and said that both companies "continue to invest substantial funds in Gigafactory." They added that Tesla believes that "much more performance can be obtained by improving existing production equipment than previously estimated."

Existing production lines that have been updated since Gigafactory opened in 2016 are "seeing significant gains," the spokesperson said. This "allows Tesla and Panasonic to achieve the same output with less expense in the purchase of new equipment." The spokesman also said that this new focus on optimizing the existing infrastructure would not affect Tesla's plans to triple the current size of the Gigafactory.

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