Tesla Motors Inc (TSLA): Panasonic is pacing carefully around Gigafactory plans
Tesla Motors Inc (NASDAQ:TSLA) has ambitious growth plans and its suppliers know it. Acknowledging the company’s rapid growth, CEO Elon Musk announced plans to build a massive “gigafactory” that would cost as much as $5 billion to build. The gigafactory would build more lithium ion cells than any other plant in the world.
In a ’60 Minutes’ interview, Tesla Motors CEO Elon Musk said he was surprised that the company succeeded this far. There was a point that Musk almost went completely broke. Fortunately, NASA gave his Musk’s commercial space exploration company SpaceX a contract and a lifeline. Investors followed shortly after that.
Tesla Motors’ lithium ion cell supplier Panasonic has not yet committed to the gigafactory plan yet. Panasonic owns a small share of Tesla Motors and seems to have indicated its involvement in the gigafactory since it was announced.
Last week, Panasonic’s president Kazuhiro Tsuga told reporters that the project has an “investment risk” that is “definitely larger” than what the company prefers. He said that Panasonic prefers to make “investments step by step.”
Tsuga said that battery production “depends” on Tesla’s sales. Panasonic monitors Tesla’s sales very closely.
Panasonic is not the only Tesla Motors stakeholder that seems skeptical about Tesla’s gigafactory. Daimler’s electric-vehicle head Harald Kroeger told The Wall Street Journal that the gigafactory has “huge disadvantages” along with all of its benefits. Daimler owns a small stake in Tesla Motors and so does Toyota. In reference to the gigafactory, Volkswagen CEO Martin Winterkorn said that he did not “quite get it.” He pointed out that Volkswagen would not consider opening its own battery plant because it had enough suppliers.
Tesla Motors currently builds around 25,000 cars per year, but the company uses one-third of the electric car batteries. In order to scale up to 100,000 vehicles, Musk said that the company will need to quadruple the supply. Tesla Motors and Panasonic are planning to work together to make this happen.
Musk also said that the company could drive down the price of its vehicles by building the gigafactory.
Tesla Motors is currently seeking a place to build the factory. The places that Tesla Motors is considering includes Arizona, Nevada, New Mexico, and Texas. Each of these states are setting up incentive programs. Tesla is still putting together the financing for the gigafactory with help from its suppliers.