Published: Sun, April 14, 2019
Markets | By Erika Turner

Gigafactory 1 expansion on ice?

Gigafactory 1 expansion on ice?

Tesla's second plant, which will also "build cars" alongside its integrated automotive batteries, will suffer the same fate as Panasonic will cease investing. The Tesla deal with PanasonicThe deal was announced in July of 2014 as reported in a Verge article: "Electric auto manufacturer Tesla has today announced a partnership with Japanese electronics giant Panasonic to build a large battery manufacturing plant on USA soil".

Tesla and Panasonic have invested $4.5 billion in the Nevada Gigafactory, and Panasonic was considering a further investment of $900 million to $1.35 billion before the delay was revealed this morning.

Shares of Tesla fell Thursday following a report the electric auto company and electronics giant Panasonic are suspending plans to expand a battery plant due to weak demand for the vehicles.

Lower-than-expected vehicle deliveries by the California-based manufacturer in the first quarter spooked stock and bond investors earlier this month, adding to Wall Street's concern about its future cashflow.

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

Batteries produced there aren't just for Tesla's cars, mind.

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"We will of course continue to make new investments in Gigafactory 1, as needed", Tesla said in a statement Thursday. Dubbed the "Gigafactory", the facility will produce the lithium-ion cells, modules, and packs that power Tesla's all-electric vehicles.

Fact is, that neither Tesla nor Panasonic have put detailed future plans for the Nevada location on the table so far.

Tesla Chief Executive Officer Elon Musk also said in November the USA company would manufacture all its battery modules and packs at its new Shanghai factory and planned to diversify its sources.

Although Panasonic is Tesla exclusive battery supplier, its deal with the electric automaker is not exclusive. Tesla is Panasonic's biggest customer for EV batteries.

In January, the Toyota Motor Corporation and Panasonic announced a new joint venture to develop advanced automotive prismatic batteries for use in Toyota electric vehicles. Tesla is expected to report first-quarter earnings on April 24, this is expected to be a key report for the company.

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