Tesla has received a new round of investment from Panasonic. The Japanese multinational electronics company has invested $100 million to increase battery production at Tesla’s Gigafactory 1 plant in Nevada.
Mission Accomplished for Tesla
In May 2019, Panasonic President Kazuhiro Tsuga stated that they may not make enough battery cells for Tesla in 2020.
Back then, Tsuga also said that Panasonic intended to increase battery-cell production before deciding whether it will make further investments in 2020.
Those comments were made by Mr. Tsuga following several comments made by Musk on Twitter back in April 2019. The Tesla CEO stated that the rate of battery-cell production from Panasonic has only resulted in a 24 GWh/year output.
The Tesla CEO was unwilling to spend additional funds to increase capacity before production lines reached their theoretical capacity of 35 GWh/year.
A Change of Heart
It’s fair to say that 2020 brought with it some noticeable changes. In light of Tesla’s recent success, Panasonic was willing to renegotiate the terms of the existing agreements.
According to a report by Reuters last May, the two companies were already in talks to expand the Gigafactory 1.
Those talks culminated in a deal signed by both companies last June. It set the terms for new production capacity commitments by Panasonic over the first two years of the agreement. The agreement also outlined purchase volume commitments on Tesla’s behalf.
A Substantial Investment
The $100 million received from Tesla was undoubtedly one of the stipulations of the new deal. Through that investment, the Gigafactory 1 will increase by one production line, to accommodate 14 production lines in total.
The investment will also lead to an increase in production capacity by 10%. The expansion will also be the first one for Tesla’s plant since it started mass-producing battery cells in January 2017. On top of all that, it will bring Gigafactory 1’s production rate to 39GWh per year.
In essence, this investment will allow Tesla to surpass its theoretical capacity threshold by 4 GWh per year.
Panasonic is no longer Tesla’s exclusive battery supplier. To meet ever-increasing demands, the company signed a deal with LG Chem Ltd. to start producing batteries for Tesla vehicles.
And now, Panasonic’s recent investment comes as an icing-on-the-cake of sorts. The increase in Tesla’s battery production will contribute to a decrease in pricing for its cars.
This will eventually prompt EVs to reach price parity with gas-powered vehicles. All in all, 2020 is, indeed, the year when Elon Musk’s companies started to reach the proverbial brass ring!