Report: Tesla, Panasonic Halt Battery Plant Expansion

Tesla Inc. and Panasonic Corp. are shelving plans to expand their Gigafactory battery plant in Nevada, sources tell The Nikkei.

The Tokyo-based newspaper says Panasonic also will suspend plans to invest in the combined electric vehicle assembly and batterymaking plant Tesla is erecting in Shanghai.

The companies had planned to hike the capacity of Tesla’s Nevada battery plant to 54 gigawatt-hours per year from the current 35 GWh. Panasonic, which makes the cells that Tesla assembles into battery systems, had planned to invest roughly $1 billion more into the $4.5 billion facility.

Panasonic’s EV battery operations with Tesla posted an operating loss of more than 20 billion yen ($180 million) in the fiscal year that ended March 31, The Nikkei says.

In Shanghai, Panasonic will supply Tesla with technical support and a modest volume of batteries from the Nevada battery plant. Last month Tesla reached a preliminary deal with Chinese banks for a 3.5 billion-yuan ($521 million) line of credit to construct the complex.

Tesla’s global sales in the first quarter of 2019 fell 31% to 63,000 units vs. the company’s record volume in the fourth quarter of 2018. But the company still expects to achieve its goal of selling between 360,000 and 400,000 vehicles this year.