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. You can participate in a drawing for a chance to own a Tesla-powered old-school VW Bug conversion. FTC: We use income earning auto affiliate links. More. Subscribe to Electrek on YouTube for exclusive videos and subscribe to the podcast.<doc-sep>TOKYO — Panasonic Corp is studying further investments in battery production at its Gigafactory venture with Tesla , the company said, responding to a media report that the two companies had frozen previous plans. Tesla, whose shares fell 3.3 percent in trading before the bell in New York, 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, Japanese financial daily Nikkei reported earlier on Thursday 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 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," Panasonic said. "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 in July last year it would consider further investment in the Gigafactory if requested by the U.S. electric carmaker. "We will of course continue to make new investments in Gigafactory 1, as needed," a Tesla spokesperson said in a statement. "However, we think there is far more output to be gained from improving existing production equipment than was previously estimated." 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, 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. 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.<doc-sep>
On Thursday morning, Japan's Nikkei Asian Review reported that Panasonic has decided to stop its planned investments in Tesla's Gigafactories. The two companies had planned to boost production capacity at the US Gigafactory from 35GWh to 54GWh by 2020; that now seems unlikely. Additionally, the Japanese company has cancelled plans to invest in Tesla's Chinese production facility, which is currently under construction in Shanghai. ¥ The news represents a reversal of Panasonic's plans; the company recently expanded the US Gigafactory from 10 to 13 production lines to help the carmaker grow. But the growth didn't happen as Tesla's sales slumped. Although the company sells more EVs than any other OEM, its deliveries for Q1 2019 were significantly lower than the previous three months. For Panasonic, that's a real problem; even when Tesla sales were booming, Panasonic failed to see any financial benefit . By the end of Panasonic's financial year, the company made a loss of more than $180 million (20 billion) from battery production. A Tesla spokesperson told Nikkei, "We will of course continue to make new investments in Gigafactory 1, as needed." Tesla further elaborated to Electrek that the company believes "there is far more output to be gained from improving existing production equipment than was previously estimated." It's possible that Tesla may diversify its battery supply in the coming years. In February, it announced a plan to purchase Maxwell Technologies, which has expertise in both automotive- and utility-grade batteries, and it's possible this has also affected Panasonic's view of its relationship with Tesla. However, the completion of that deal keeps being delayed and is now not expected to take place until mid-May. Update: Tesla contacted Ars with the following statement: "Both Tesla and Panasonic continue to invest substantial funds into Gigafactory. That said, we do believe there is far more output to be gained from improving existing production equipment than was previously estimated. We are seeing significant gains from upgrading existing lines to increase output, which allows Tesla and Panasonic to achieve the same output with less spent on new equipment purchases." "However, we will of course continue to make new investments in Gigafactory 1, as needed. Most importantly, contrary to what is implied in this report, our demand for cells continues to outpace supply. It remains the fundamental constraint on Tesla vehicle and Powerwall/Powerpack production.”