Tesla and Panasonic Halt Plans To Expand Gigafactory - Model 3 Demand Slows

Tesla Panasonic Pull Back On Gigafactory Investments

Tesla's second plant, which will also "build cars" alongside its integrated automotive batteries, will suffer the same fate as Panasonic will cease investing.

Panasonic is responsible for the high tech battery chemistry inside of the Gigafactory, and once the batteries are completed they are handed to Tesla (NASDAQ:TSLA) to assemble and package them. The report claimed that Panasonic froze a decision to put another $900 million to $1.35 billion into the Nevada Gigafactory. This seemed to confirm reading the report as potentially misguided because we had heard for the first time of involvement of Panasonic at Tesla's China Gigafactory.

Panasonic's hesitation to pour more money into Gigafactory may be less of an indictment of Tesla, which reported a significant slowdown in the first quarter of this year, than it is on the status of EV and battery production.

Tesla and its partner Panasonic are scrapping plans to upgrade the capacity of Tesla's massive Nevada Gigafactory according to a report out of Japan that surfaced this morning. Tesla reported lower-than-expected auto deliveries in the first quarter, which spooked investors earlier this month.

A Tesla spokesperson told Nikkei that "We will of course continue to make new investments in Gigafactory 1, as needed".

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Batteries produced there aren't just for Tesla's cars, mind. Panasonic also produces solar cells for the company's solar roof panels.

Tesla and Panasonic previously planned to increase the factory's capacity by 50% by 2020, but have since reconsidered their plans, the Nikkei Asian Review said.

Wall Street analysts have sounded the alarm in recent months about slowing demand for Tesla's electric vehicles. Neither Tesla nor Panasonic have said that Panasonic would be supplying batteries for the plant. Does that mean Panasonic is pulling the plug on Elon Musk EV's?!

In January, the Toyota Motor Corporation and Panasonic announced a new joint venture to develop advanced automotive prismatic batteries for use in Toyota electric vehicles.

Tesla declined as much as 4.7 per cent in pre-market trading and was down 3.4 per cent to US$266.80 as of 8:28am on Thursday in NY.

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