There are two questions I’d like to answer in this video:
Will we see the end of Tesla’s exclusive partnership with Panasonic
Will Tesla buy out Panasonic’s Gigafactory investment of $1.6b and move battery cell production in house?
July 21, 2009 Tesla and Panasonic sign initial supply agreement
“This Agreement shall commence on the Effective Date and, unless terminated as set forth in Section 15 (Termination), shall end on December 31, 2010. This Agreement, however, shall be automatically extended from year to year for additional one (1) year periods, unless one Party gives a written notice of termination to the other Parties at least sixty (60) days before the expiration date of the initial term or then current term. The effective period of this Agreement is referred to as the “Term.””
November 2010 Panasonic invest $30m in common stock
October 11, 2011 Tesla and Panasonic extend supply agreement with battery cells for 80,000 vehicles over four years
February 26, 2014 Tesla announces plans for Gigafactory
End of Q2 2014 Tesla had produced ~40,000 Model S
July 21, 2014 Tesla and Panasonic sign agreement for Giga 1
“According to the agreement, Tesla will prepare, provide and manage the land, buildings and utilities. Panasonic will manufacture and supply cylindrical lithium-ion cells and invest in the associated equipment, machinery, and other manufacturing tools based on their mutual approval. A network of supplier partners is planned to produce the required precursor materials. Tesla will take the cells and other components to assemble battery modules and packs. To meet the projected demand for cells, Tesla will continue to purchase battery cells produced in Panasonic's factories in Japan.”
“The Gigafactory will be managed by Tesla with Panasonic joining as the principle partner responsible for lithium-ion battery cells and occupying approximately half of the planned manufacturing space; key suppliers combined with Tesla's module and pack assembly will comprise the other half of this fully integrated industrial complex.”
“The Gigafactory will produce cells, modules and packs for Tesla's electric vehicles and for the stationary storage market. The Gigafactory is planned to produce 35GWh of cells and 50GWh of packs per year by 2020. Tesla projects that the Gigafactory will employ about 6,500 people by 2020.”
March 21, 2016 Tesla unveils Model 3
July 30, 2016 Tesla unveils Gigafactory
July 1, 2018 Panasonic says they would invest more into Giga 1 if Tesla asked
“Ito said last week at Panasonic’s general shareholders meeting that a pickup in production of the Model 3 has resulted in occasional battery cell shortages.”
August 2018 Tesla says they are at 20 GWh cell production with a goal to get to 35 GWh by end of year
September 27, 2018 Panasonic says they will add 3 more cell lines to a total of 13 by end of year
Yoshio Ito, head of Panasonic’s automotive business says “The bottleneck for Model 3 production has been our batteries,” Ito said. “They just want us to make as many as possible.”
November 2, 2018 Elon says they will source batteries locally from companies including Panasonic and Lishan Battery (clients: Apple, Samsung, Geely, and Hyundai)
January 21, 2019 Panasonic and Toyota announce partnership for prismatic batteries
February 4, 2019 Maxwell announces merger with Tesla
April 11, 2019 Nikkei reports that Panasonic will not be making any new investments in Giga 1 and 3
April 13, 2019 Elon Musk says Panasonic is only producing 24 GWh/year
“Incorrect. Pana cell lines at Giga are only at ~24GWh/yr & have been a constraint on Model 3 output since July. No choice but to use other suppliers for Powerwall/Powerpack cells. Tesla won’t spend money on more capacity until existing lines get closer to 35GWh theoretical.”
“There is 35 GWh/yr “theoretical capacity”, but actual max output is ~2/3. It was physically impossible to make more Model 3’s in Q1 due to cell constraints.”
April 24, 2019 Panasonic considers converting Japanese 18650 line to 2170 for Model 3 to go into affect March 2020
Tesla and Panasonic no longer has an exclusive agreement to work together
Panasonic could not fully fulfill 35 GWh of cell production
Tesla appears to be working with other cell suppliers like Lishen Battery
This does indicate the end of Tesla and Panasonic’s exclusive agreement.
One question: Where does Maxwell acquisition fit into the mix?
If Maxwell’s claims are true, their DBE tech will increase production capacity by 16x and 10-20% cost reduction for Tesla. This means higher output of making more efficient use of manufacturing space with a higher profit margin for Tesla.
I had originally toyed around with the idea of Tesla buying out Panasonic at Giga 1 and getting even more vertical with battery cell production. Though this could be a potential in the future, however, in order for this to happen Tesla would need to execute on the Maxwell acquisition and assume that their tech can sustain high volume production.