The World's #1 Renewable Energy Network for News, Information, and Companies.

Panasonic Agrees to Help Tesla Build Battery ‘Gigafactory’

Panasonic Agrees to Help Tesla Build Battery ‘Gigafactory’

Panasonic Corp. agreed to help set up the battery factory that Tesla Motors Inc. Chairman Elon Musk needs to sell more electric cars, without settling its share of the investment costs.

Panasonic will build cylindrical lithium-ion cells and provide equipment, machinery and other tools for Musk’s “Gigafactory,” the Osaka, Japan-based company said today in a joint statement with Tesla. The companies said they were still discussing the details, including Panasonic’s financial contribution to the facility, which Tesla has estimated could cost as much as $5 billion by 2020.

“We will reach a plan that is profitable,” Panasonic Chief Financial Officer Hideaki Kawai said at a news conference in Tokyo. “We will do step-by-step investment to meet the gradually growing needs.”

Tesla has courted Panasonic to invest in the factory Musk is counting on to produce cheaper batteries and help transform the company from a seller of $71,000 Model S sedans into a mass- market carmaker capable of producing 500,000 vehicles a year. Panasonic, which owns 1.1 percent of Tesla, signed a preliminary agreement to participate in the project in May after voicing hesitancy about the level of investment risk.

Separately, Panasonic reported profit of 37.9 billion yen ($368 million) for the three months ended June, missing analysts’ estimates. Its shares rose 0.6 percent to 1,257.50 yen in Tokyo today. Tesla gained 1.7 percent to $228.92 yesterday in New York and has surged 52 percent this year.

‘Significant Risk’

Panasonic is cementing its participation in the project after Tesla raised about $2.3 billion in March to help fund it. Musk faces skeptics in his effort to build a factory with enough scale to cut battery costs by about 30 percent. Standard & Poor’s slapped Tesla with a junk credit rating in May and cited “significant risk” in its Gigafactory plans.

“If Tesla’s EVs do not sell in line with Tesla’s expectations, Panasonic may not be able to recoup its investment,” Masahiro Wakasugi, a Tokyo-based analyst at BNP Paribas, wrote in a July 10 report. “The negative impact, if the plan is not a success, would be considerable.”

Cheaper batteries will be crucial for Tesla to introduce more affordable models beginning with the Model 3 sedan due by 2017. Tesla plans to sell the car at a base price of about half the U.S. cost of its flagship Model S.

Power Storage

Musk, who also runs rocket maker Space Exploration Technologies Corp. and SolarCity Corp., plans to build stationary batteries to store power at homes and buildings with solar panels from the plant.

“Not only does the Gigafactory enable capacity needed for the Model 3 but it sets the path for a dramatic reduction in the cost of energy storage across a broad range of applications,” JB Straubel, Tesla co-founder and chief technical officer, said in the statement.

Tesla is studying potential sites for the Gigafactory in Arizona, California, Nevada, New Mexico and Texas and may initially select three for preparation work. The company will choose which site to build to completion late this year, Musk said during an annual shareholder meeting in June.

Simon Sproule, a Tesla spokesman, declined to discuss whether the carmaker will name the initial factory sites today when it releases second quarter results.

Copyright 2014 Bloomberg.

Lead image: Battery Illustration via Shutterstock.


Regional News from the July/August 2015 Digital Edition of Renewable Energy World

Renewable Energy World Editors EcoFasten Solar announced that it launched a new mounting "Rock-It System" that it would be displaying during Intersolar. Product compliance was determined through testing per UL Subject 2703, which reviews integ...

How Solar Energy Zones and Easy Permitting Helped Create 3-cent Solar

Susan Kraemer, Correspondent Warren Buffet's utility NV Energy has signed the lowest price contract for solar ever, at just US $0.0384 for First Solar’s 100-MW Playa Solar project, beating even its own record low price of $0.046 cents for SunPower's 1...

California Approves Distributed Energy Resource Providers To Aggregate Renewable Energy Generation

Mark Chediak and Jonathan N. Crawford, Bloomberg News If you live in California, there’s a chance that a neighbor with rooftop solar panels will help keep your lights on soon. In a first, the state’s grid operator has approved rules allowing companies to buy electricity from ...

Renewable Energy Giant SunEdison Continues To Expand With Purchase of Vivant Solar

Christopher Martin, Bloomberg SunEdison Inc. said it will entrench its position as one of the “super majors” of the solar power industry with the $2.2 billion purchase of rooftop panel installer Vivint Solar Inc. The two agreed to combine for cash, sha...


Volume 18, Issue 4


To register for our free
e-Newsletters, subscribe today:



Exhibitor/Training/Speaking: Solar Power International 2015 - Booth...

Solectria will be in Booth #2320. Trainings: NEC 2014, AFDI, & Rapid...

Utility Scale Solar Summit 2015

Oct. 21, 2015 4:30-5:15pm Albie Fong, National Director, Solar Frontier ...

5th Annual Hydro Plant Maintenance

Join maintenance professionals to discuss the challenges in maintenance ...


Think Systems, Not Pieces

One of the challenges we have in this industry is a lot of inexperienced...

Look and Listen

Yesterday, we talked about why you should talk less and listen more in t...

7 Seconds, Max

Most buyers are put off by the “pushy salesman” –...


Tweet the Editors! @megcichon @jennrunyon


Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now