Daily Management Review

Increase In Tesla Model 3 Output Forces Panasonic To War Battery Cell Shortage


06/28/2018




Increase In Tesla Model 3 Output Forces Panasonic To War Battery Cell Shortage
Signs that Tesla is in production frenzy to meet its end-June forecast became evident after a Panasonic Corp official warned of occasional battery cell shortages. Tesla has been attempting to increase production of its Model 3 cars following earlier delays.
 
There however has been skepticism from some Wall Street analysts to the comments made by Silicon Valley tech billionaire and Tesla Chief Executive Elon Musk when he had commented earlier this month that his company is on wat to achieving the target of 5,000 cars-per-week by the end of June.
 
There had been a “sharp improvement in production” which could lead to occasional battery cell) shortages, said Yoshio Ito, head of Panasonic’s automotive business, to the shareholders of he company at a meeting on Thursday.
 
Batteries produced by Panasonic both in Japan as well as in the so-called Gigafactory in the U.S. state of Nevada of tesla that is also jointly operated by the Japanese firm, for the production models of Tesla and Panasonic is the exclusive battery supplier for the electric car manufacturer.
 
Panasonic also co-owns a plant with Tesla that manufactures solar cells and modules and the new factory is situated in Buffalo, New York.
 
But for Panasonic, being too dependable for its battery business on Tesla sometimes appears to be very risky because of the car maker has often faced production bottlenecks.
 
Tesla is facing regulatory scrutiny that hurt its share value because of a fatal crash in California earlier this year that involved a car of the company and another incident in Florida last year.
 
Earlier this month, Tesla also declared that in its attempt to reduce costs and become profitable, it would cut several thousand jobs throughout the company. the company however also announced that the reduction in workforce would be done in a manner that the critical production ramp-up for the sedan – which is critical for the company, is not endangered.
 
“I wouldn’t say the delay (in Tesla’s Model 3 production) had no impact on our business, but we are in close communications with Tesla and working to steadily improve production,” Ito said.
 
For Panasonic, its battery business is critical for the company in achieving its target of boosting revenues for its automotive business to touch about 2.5 trillion yen by the year through March 2022 compared to about 1.8 trillion yen ($16.3 billion) that the company estimates to generate in the current financial year.
 
Panasonic has joined hands with car maker Toyota Motor Corp to develop batteries jointly for electric vehicles so that the risks associated with its dependence on Tesla is reduced.
 
It is unlikely that all solid-state batteries which are next-generation batteries that are believed to be more stable, would be hitting the market any time soon despite the company being associated with the development of such batteries, said Panasonic Chief Executive Kazuhiro Tsuga at the shareholders meeting.
 
“We believe we can continue to improve performance of today’s lithium-ion batteries at least until around 2025,” Tsuga said. The commercialization of all solid-state batteries would come after that progress, he said.
 
(Source:www.reuters.com)






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