Panasonic May Step Up Investment in Tesla Battery Factory

Panasonic Corp. tells reporters it may accelerate its investment in Tesla Motors Inc.’s giant battery plant in Nevada.

Last year Panasonic contributed an initial $250 million to the $5 billion “gigafactory” project to help launch low-volume production there later this year. Tesla now says it aims to hike annual output of its electric cars from roughly 50,000 last year to 10 times that volume in 2018—two years earlier than previously planned.

Tesla’s new production target would match the company’s EV annual output with the capacity of the gigafactory to make lithium-ion batteries.

Panasonic has pledged to boost its investment in the 10 million-sq-ft facility to $1.5 billion by about 2020. But if Tesla achieves its ambitious production target sooner, “We don’t want to be a bottleneck,” says Yoshio Ito, who heads Panasonic’s automotive and industrial systems unit.

Ito notes that Panasonic’s challenge will be to balance its responsibility as a Tesla supplier with the need to match investment with return. Tesla CEO Elon Musk has predicted the gigafactory will be able to reduce battery costs 30%, thereby helping the company hold the cost of its upcoming Model 3 electric sedan to $35,000.