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Panasonic says reviewing further investment in Tesla Gigafactory

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Panasonic says reviewing further investment in Tesla Gigafactory
FILE PHOTO: A logo of Panasonic Corp is pictured at the CEATEC JAPAN 2017 (Combined Exhibition of Advanced Technologies) at the Makuhari Messe in Chiba, Japan, October 2, 2017. REUTERS/Toru Hanai/File Photo   -   Copyright  TORU HANAI(Reuters)
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(Reuters) – Panasonic Corp is studying further investments in battery production at its Gigafactory venture with Tesla Inc, the company said, responding to a media report that the two companies had frozen previous plans.

Tesla shares fell 4.2 percent to $264.45 in premarket trading on Thursday.

Giving no details of its sources, Japanese financial daily Nikkei reported earlier on Thursday that financial issues had led Tesla and Panasonic to rethink plans to expand the capacity of Gigafactory 1 by another 50 percent next year, having together invested $4.5 billion (3.44 billion pounds) in the plant.

The paper said the companies had earlier planned to expand the plant’s capacity to the equivalent of 54 gigawatt hours a year by 2020, up 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.”

Tesla did not immediately respond to a request for comment.

The two companies had not made public any detailed investment 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.

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 Inc, sending shares in Panasonic lower.

Chief Executive Elon Musk said in November that the U.S. company planned to source battery cells locally in China, “most likely from several companies.”

Lower-than-expected car 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.

Tesla is expected to report first-quarter earnings on April 24.

(Reporting by Vibhuti Sharma in Bengaluru; editing by Patrick Graham and Anil D’Silva)

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