Tesla Gigafactory Expansion Allegedly On Hold as Panasonic Ponders the Future

 Tesla and Panasonic both have a vested interest in the achievement of Gigafactory, the EV automaker’s committed battery plant. And, with ground having broken on another Gigafactory at Shanghai in January which will construct cars, today’s probably not the perfect time for reports which Panasonic could have toes that are cold. Tesla and Panasonic have frozen plans to enlarge Nevada’s Gigafactory, and Panasonic will also halt its investment at the Shanghai Gigafactory, the Nikkei Asian Review reports, citing sources knowledgeable about the issue. Nikkei’s report asserts that it is now too dangerous to make big investments such as those mentioned, blaming the pause on both lean operating margins in the market and EV earnings which are performing below plans.

Neither company appears especially worried about anything. Reuters reports that Panasonic said that it was analyzing further investments in Gigafactory, while Tesla stated it believed more output might be obtained from its present resources than previously thought. The report of Nikkei stated that Panasonic has suffered more than 20 billion yen in losses, due in part to Model 3 generation delays. Neither Tesla nor Panasonic instantly returned roadshow request for comment. Gigafactory 1, the website at Nevada, is a JV with $4.5 billion behind it to date. Panasonic builds the cylindrical battery cells themselves, while Tesla organizes these cells to battery packs before installing them from vehicles at its Fremont center.

The expansion, that was supposed to be performed by 2020 based on Nikkei, would have bumped at yearly battery capacity in 35 hours to 54. The two companies signed an agreement in 2009. Shanghai’s Gigafactory, referred to as Gigafactory 2, expects to build batteries and cars for neighborhood markets, eliminating the frustrating shipping process that Tesla currently endures to send its vehicles to The Middle Kingdom. Gigafactory 2 will not be a very simple JV between only Tesla and Panasonic, though, it is allegedly working to secure additional provider arrangements to guarantee the mill can run at its anticipated full clip.

The first quarter of 2019 was a mixed bag for Tesla. The car manufacturer built 77, 100 vehicles in Q1, an overwhelming majority of that were Model 3s, a vast improvement over previous amounts. At the same time, deliveries were down compared to Q4 2018. Whilst it was still a year over year improvement, Tesla blamed long deliveries to China and Europe for the reduce delivery figure. The car manufacturer is working on enhancing its delivery process, and the Chinese Gigafactory will play a significant part in reducing these stressors.