Thursday 11 April 2019 1:38 pm

Panasonic reviews plans for investment in Gigafactory battery plant with Tesla

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Panasonic is reviewing further investments in battery manufacturing at its Tesla Gigafactory site amid fears of declining demand for the high-performance electric cars.

The move comes after local media reports stated the two companies had frozen plans to expand capacity at the Gigafactory 1 site in Nevada by a further 50 per cent.

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“Panasonic established a battery production capacity of 35 gigawatt hours a year (GWh) in Tesla’s Gigafactory 1 by the end of March 2019 in line with growing demand,” Panasonic said in a statement provided to Reuters.

“Watching the demand situation, Panasonic will study additional investments over 35GWh in collaboration with Tesla.”

The move comes amid growing uncertainty over the demand for cars manufactured by Elon Musk’s company. Earlier this month Tesla warned investors the firm had suffered a record quarterly drop in car deliveries.

Panasonic is the sole supplier of lithium-ion battery cells for Tesla vehicles, and a slowdown in production would indicate a significant lack of confidence in the US firm’s trading.

The two companies had previously planned to expand the factory’s capacity to the equivalent of 54 GWh a year by 2020, according to media reports.

Tesla said the firm had decided to focus its investment on improving its existing production equipment, rather than trying to expand.

Read more: Tesla shares drop after record quarterly fall in car deliveries

“We will of course continue to make new investments in Gigafactory 1 as needed,” a spokesperson for Tesla said.

“However, we think there is far more output to be gained from improving existing production equipment than was previously estimated.”