Panasonic exec a little shy about Gigafactory project


Panasonic (PCRFY) President Kazihiro Tsuga says the company hasn't committed itself to the famed Tesla Motors (TSLA) Gigafactory project just yet.

The exec noted the project could increase investment risks for the company.

TSLA +0.1% premarket

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Comments (95)
  • Frank Greenhalgh
    , contributor
    Comments (3944) | Send Message
     
    This is the problem. Why would Panasonic want to give Tesla all it's know how and two billion bucks to advance Tesla's ability to build its own batteries? Not a win win situation for Panasonic. What does Musk do now.
    27 Mar 2014, 07:38 AM Reply Like
  • doubleE
    , contributor
    Comments (4575) | Send Message
     
    Actually it is a win-win. There is zero chance panasonic walks away from gigafactory.
    It is in panasonic s best interest both as a cell supplier and a tesla shareholder that gen3 comes to market and sells in high volume. That does not happen without gigafactory. Having tesla pony up most of the upfront capital while Panasonic takes a minority stake and gets paid for its IP makes far more sense for Panasonic than doing the investment all by itself.
    Such public posturing means the two companies are very close to an agreement.
    27 Mar 2014, 07:45 AM Reply Like
  • Joe Tradesnizar
    , contributor
    Comments (15) | Send Message
     
    So your saying the CEO would intentionally drive down his stock price? Because that is what would/will happen by saying they may not pursue a potential revenue boost. He would be ousted. Not very logical.
    27 Mar 2014, 08:15 AM Reply Like
  • jimr1
    , contributor
    Comments (112) | Send Message
     
    It's called negotiation. Suggests to me Tesla wants the best deal from its partner(s) it can get.
    27 Mar 2014, 08:59 AM Reply Like
  • Tales From The Future
    , contributor
    Comments (7385) | Send Message
     
    "Actually it is a win-win. There is zero chance panasonic walks away from gigafactory."

     

    doubleE, if it's such as good investment Panasonic would have probably signed a contract a long time ago, no?

     

    TSLA has been talking about this plant publicly for almost a year now and the deal is still not signed with Panasonic.

     

    TSLA is under pressure, not Panasonic. They have to start construction in the next few months, otherwise the plant won't be ready by 2017 for the Gen III car. See Tesla's timeline in their blog (PDF).

     

    Panasonic repeatedly said it wants to increase its margins after three years of losses - meaning TSLA (and other battery customers) won't get the deals it got with the old contracts when Panasonic had spare capacity in its battery units.

     

    PS: I always wondered why the TSLA bondholders snapped 2+ billion in debt when the "partners" of the gigafactory haven't signed up.
    27 Mar 2014, 09:01 AM Reply Like
  • Joe Tradesnizar
    , contributor
    Comments (15) | Send Message
     
    If that's the case it sounds like Panasonic isn't having it.
    27 Mar 2014, 09:07 AM Reply Like
  • seeker34567
    , contributor
    Comments (205) | Send Message
     
    If Panasonic backs off, other entities will partner with Tesla. Panasonic is being given the privilege of being asked first and they should know this.

     

    Do you think the Lithium Carbonate mining cartel would allow Tesla to fail? Do you think China will allow it? Do you think Warren Buffet is waiting to be asked? Or Google and Apple? Don't you think all these entities are just waiting to be asked? Rather than just buy Tesla stocks, they waiting to wheel and deal.

     

    This Gigafactory will be built.
    27 Mar 2014, 11:51 AM Reply Like
  • Yesterdays_news
    , contributor
    Comments (2075) | Send Message
     
    "Actually it is a win-win. There is zero chance panasonic walks away from gigafactory."

     

    Battery technology could totally change by the time the factory is built and Panasonic could be left holding the bag. That is what Panasonic is worried about.

     

    But if this factory does get built, I will be buying some of the dirt cheap graphite stocks that are based in North America. Graphite is the main negative electrode material used in lithium ion batteries. Each electric car contains about 100+ pounds of graphite. And everyone is making more and more batteries for cars, large mass storage systems, and bigger advanced electronic devices like iPhones.
    http://bit.ly/1iE2ZXM
    27 Mar 2014, 11:59 AM Reply Like
  • Evening investor from China
    , contributor
    Comments (91) | Send Message
     
    I believe Panasonic's real worry is about sinking $2B into an already commoditized technology. Tesla and Musk may have tricks to make investor and consumer believe its car is best EV, but Panasonic really wouldn't have the confidence to believe a plain vanilla technology justifies billions of dollars of investment.

     

    It's really risky!
    27 Mar 2014, 12:30 PM Reply Like
  • Evening investor from China
    , contributor
    Comments (91) | Send Message
     
    "Battery technology could totally change by the time the factory is built and Panasonic could be left holding the bag. That is what Panasonic is worried about."

     

    Exactly!
    27 Mar 2014, 12:31 PM Reply Like
  • Ford Prefect 1969
    , contributor
    Comments (2267) | Send Message
     
    "Battery technology could totally change by the time the factory is built and Panasonic could be left holding the bag. That is what Panasonic is worried about."

     

    Um no, that is just a weird comment.

     

    Battery technology in the lab might change, but commercially available batteries will be produced by the big commercial players. Like Panasonic, or on a much larger scale, Tesla.

     

    What would make anyone imagine that Tesla will be the slowest off the block to mix up some new chemistry and run it down their production line is beyond me.

     

    On top of that, what good is a fancy battery when Tesla has the fancy cars?

     

    Apparently most of the rest of auto industry wants to waste time fighting a PR battle against sustainable energy and transportation with FCVs. I would take that as a signal of defeat when it comes to the actual engineering race for sustainable energy and transportation.

     

    Bottom line, the prospects of Tesla ending up as a very large and dominant player rather than just a catalyst of change has gone up rather a lot.
    27 Mar 2014, 12:53 PM Reply Like
  • chipdoctor
    , contributor
    Comments (2554) | Send Message
     
    Hi FP,

     

    What value is Tesla if they do not have the battery technology? Else, they need to compete with GM, Ford, BMW, etc for the manufacturing of the sled/glider, which is a battle Tesla will lose.

     

    Tesla better hurry up with that Metal Air battery...or maybe they should start working on a Thorium solution.
    27 Mar 2014, 01:27 PM Reply Like
  • portatopia
    , contributor
    Comments (1449) | Send Message
     
    The 2+ billion probably bought by some bond fund manager and pension funds which probably represent a very small percentage of their profolio. It might not have material impact on funds if they lost the bond completely.
    27 Mar 2014, 02:24 PM Reply Like
  • MarketLost
    , contributor
    Comments (2912) | Send Message
     
    @EE, although I may agree that a deal is likely to get done, I would point out that you are thinking as a supporter of Tesla. Panasonic is not just here to give Tesla's stakeholders what they want; they have their own stakeholders to consider. To think that somehow the two are in accord could be a grave mistake.
    27 Mar 2014, 05:18 PM Reply Like
  • MarketLost
    , contributor
    Comments (2912) | Send Message
     
    @Joe Tradesnizar, Panasonic's stock will survive just fine without Tesla. Or are you referring to Tesla's stock?
    27 Mar 2014, 05:23 PM Reply Like
  • MarketLost
    , contributor
    Comments (2912) | Send Message
     
    @Seeker

     

    <<If Panasonic backs off, other entities will partner with Tesla. Panasonic is being given the privilege of being asked first and they should know this.>>

     

    No disrespect, but you need to take off the rose coloured glasses, and look at the reality. Panasonic already owns part of Tesla, so you may want to question why they aren't ready to jump.

     

    <<Do you think the Lithium Carbonate mining cartel would allow Tesla to fail? Do you think China will allow it? Do you think Warren Buffet is waiting to be asked? Or Google and Apple? Don't you think all these entities are just waiting to be asked? Rather than just buy Tesla stocks, they waiting to wheel and deal.>>

     

    There isn't one question I think is valid. Buffet doesn't invest in stocks like Tesla - ever. The "cartel" doesn't care, and what in the world does China, Apple, or Google have to do with it??? It sound like you are just grasping at straws, and that's a sign that you don't have a logical reason for your position.
    27 Mar 2014, 05:28 PM Reply Like
  • Rik1381
    , contributor
    Comments (1402) | Send Message
     
    @MarketLost
    "Panasonic's stock will survive just fine without Tesla"

     

    Maybe not. Panasonic seems to be increasingly dependent on their Li-ion battery business to survive. A partnership in Tesla's Gigafactory would be huge for Panasonic.

     

    Reuters, August 21, 2013
    Driving profits: Panasonic to expand in lithium-ion batteries
    "The Japanese electronics conglomerate, smarting from $15 billion in combined losses over the last two years, will invest at least 20 billion yen ($200 million) in the year to March to boost production of both small and large lithium-ion batteries for automakers, the people said."
    "But Tesla Motors Inc, a Panasonic customer that uses unconventional packs of small batteries in its Model S electric car, has helped fuel a rebound in demand, along with hybrid and electric vehicles made by Toyota Motor Corp, Volkswagen AG and others that use larger batteries."
    "Panasonic's small lithium-ion battery division had a standout April-June quarter with a 4.1 billion yen operating profit and a 5.8 percent margin, marking a turnaround from a 2 billion yen loss in the same period last year."
    27 Mar 2014, 05:47 PM Reply Like
  • Ford Prefect 1969
    , contributor
    Comments (2267) | Send Message
     
    @chipdoctor

     

    How would you propose Tesla can lose a competition on a sled/glider that it has clearly already won hands down?

     

    BMW lost that race with the i3 when it put the motor and inverter in the "engine bay". Backwards thinking is hard to turn around.

     

    Metal Air, that's also funny.

     

    Toyota thinks it might have such a thing in 2020. Judging by the very advanced stage patents that Tesla has been filing (functional patents for incorporation in their vehicles) I would say Tesla is 5 years ahead on that too.

     

    Reactor tech. I presume you are being facetious. Having said that, Tesla has a modular battery tray. The Model S can be updated with anything at all that comes along in terms of storage or power that will fit in that tray. Technically you could put the Mars Curiosity rover nuclear battery in there and have a self charging car for life. Who knows what will come along - whatever it is, Model S is ready unlike anything else on the road.
    27 Mar 2014, 07:22 PM Reply Like
  • seeker34567
    , contributor
    Comments (205) | Send Message
     
    Market Lost,

     

    All you said is you disagree but you haven't made a statement why any of these companies have no vested interest in Tesla.

     

    Even common drivers have vested interest, if only to make their driving gas free.
    27 Mar 2014, 07:26 PM Reply Like
  • MarketLost
    , contributor
    Comments (2912) | Send Message
     
    @Rik, I've dealt with Panasonic for a few years, and they have a thriving business in many different fields. They have done a good job in moving from consumer to industrial/commercial. They took a big hit due to the tsunami, and other issues, but they've refocused and done well. As you noticed, they had a hard issue with batteries, but that wasn't the only factor as other auto companies such a Toyota, and VW used their batteries.

     

    More importantly, although I do believe Panasonic will come to terms, if they don't they still have a viable business in AV, and batteries with other companies.
    27 Mar 2014, 08:00 PM Reply Like
  • MarketLost
    , contributor
    Comments (2912) | Send Message
     
    @seeker, what vested interested would any company, other than Panasonic, Daimler-Benz or Toyota have in Tesla? What thesis are you using to determine that Google, Apple, or anyone else would invest in Tesla? It is your assertion, what evidence can you provide?

     

    As for common drivers, they aren't going to buy a car just because a company you like sells it.
    27 Mar 2014, 08:04 PM Reply Like
  • maggas
    , contributor
    Comments (473) | Send Message
     
    "why tesla bondholders snapped ...not signed up'

     

    bondholders not as smart as sa groupies, is the answer
    28 Mar 2014, 05:47 AM Reply Like
  • maggas
    , contributor
    Comments (473) | Send Message
     
    really risky? shall we make a tiny wager? lets talk after panasonic signs. why would they come out and say that?
    28 Mar 2014, 05:47 AM Reply Like
  • Johnny04
    , contributor
    Comments (172) | Send Message
     
    Tesla probably asked Panasonic to contribute more than the CEO is willing to. I think this is Panasonic's way of pressuring Tesla to lower their demands, but there is no way Panasonic will walk away. Elon's plan is not just to build 500k cars a year but to disrupt the battery, solar and electricity industries. That's just too big of a pie to walk away.
    29 Mar 2014, 10:50 AM Reply Like
  • Joe Tradesnizar
    , contributor
    Comments (15) | Send Message
     
    @MarketLost I was replying to jimr1 "It's called negotiation. Suggests to me Tesla wants the best deal from its partner(s) it can get." I meant if Tesla is trying to get the best deal from Panasonic and this is all posturing, Panasonic isn't having it.

     

    Panasonic will do perfectly fine without this partnership. I'm not sure if the risk/reward is in scope of how they like to operate though.
    31 Mar 2014, 12:50 PM Reply Like
  • Retired2thDoc
    , contributor
    Comments (96) | Send Message
     
    he will probably re-invent the (wheel) battery making process, just outside the patents.
    27 Mar 2014, 07:46 AM Reply Like
  • chipdoctor
    , contributor
    Comments (2554) | Send Message
     
    Hi Retired2thDoc,

     

    Excellent idea, make the wheel a battery so it can be easily replaced. 50K miles gets you a new tire and battery! Maybe we can work the brakes into this as well.
    27 Mar 2014, 01:44 PM Reply Like
  • MarketLost
    , contributor
    Comments (2912) | Send Message
     
    @chipdoctor, if he can get 50K on the tires, then I'm all ears. ;-)
    27 Mar 2014, 05:31 PM Reply Like
  • Joe Tradesnizar
    , contributor
    Comments (15) | Send Message
     
    My tires get 50k. They are actually rated at 80k.
    28 Mar 2014, 09:39 AM Reply Like
  • Frank Greenhalgh
    , contributor
    Comments (3944) | Send Message
     
    I am not sure that it is in Panasonic's best interests. If the Gigafactory isn't built Panasonic will have all Tesla's business anyhow. Also Tesla only has about $2 billion of the 5-6 billion required. This is serious stuff. Without Panasonic the stock will also dive.
    27 Mar 2014, 08:01 AM Reply Like
  • otiswild
    , contributor
    Comments (40) | Send Message
     
    Tesla is already looking to make a deal with Samsung as a secondary supplier:

     

    http://reut.rs/1dRvOxi

     

    So if Panasonic doesn't want to play ball, perhaps Samsung (or LG, or some Chinese batterymaker) will.
    27 Mar 2014, 10:55 AM Reply Like
  • chipdoctor
    , contributor
    Comments (2554) | Send Message
     
    Hi otiswild,

     

    While i would consider an EV with an American, European, Korean or Japanese manufacturer, I would not consider one with Chinese batteries.

     

    There are quality differences.
    27 Mar 2014, 01:29 PM Reply Like
  • Dan Fichana
    , contributor
    Comments (1918) | Send Message
     
    You do know who purchased A123, right? A Chinese company

     

    http://bit.ly/OYv5CZ

     

    So I guess the Spark and BMW hybrids are also out, right?
    27 Mar 2014, 02:15 PM Reply Like
  • MarketLost
    , contributor
    Comments (2912) | Send Message
     
    @Dan, now you take my BMW from me?? :-(
    27 Mar 2014, 05:33 PM Reply Like
  • Johnny04
    , contributor
    Comments (172) | Send Message
     
    It seems naive to think someone who can build cars and rockets from scratch can't make batteries on his own, especially when he already has a lot of experience with batteries. If Panasonic is not in, then it will be in a world of hurts when Tesla makes batteries 30-40% cheaper.
    28 Mar 2014, 11:26 PM Reply Like
  • blanck1
    , contributor
    Comments (59) | Send Message
     
    The thing is, corporations with good management, unlike investors, don't act on emotion. Why would Panasonic risk such a substantial sum in the absence of an extremely high probability of sufficient demand for the output of that investment? There is no evidence that there will be that demand. Better for Panasonic if it just gradually expands its own capability as demand comes more into focus than to set up a competitor.
    27 Mar 2014, 08:17 AM Reply Like
  • David RG
    , contributor
    Comments (2823) | Send Message
     
    Elon says there will be huge demand so it must be true blanck1
    27 Mar 2014, 09:01 AM Reply Like
  • jimr1
    , contributor
    Comments (112) | Send Message
     
    The battery plant lowers the cost of batteries by at least 30 percent. That lowers the cost for all batteries produced. This kind of cost reduction would make the battery business of all non-partners at risk of being unable to compete. For this reason, as well as an opportunity to be an integral part of the transformational shift from ICE to electric, Panasonic should be anxious to be part of the gigafactory. Tesla is essential for the base load, and Tesla dollars are necessary to reduce the risk. The gigafactory also helps companies like Apple potentially reduce costs by hundreds of millions per year. Think ipad, iPhone, and MacBook Air batteries.
    27 Mar 2014, 09:09 AM Reply Like
  • Joe Tradesnizar
    , contributor
    Comments (15) | Send Message
     
    The Gigafactory wouldn't be producing batteries for the iPad/Iphone/Macbook Air. Nor would the creation of it reduce the strain on supply as Tesla/electric car batteries aren't driving up the cost of them.
    27 Mar 2014, 09:30 AM Reply Like
  • David RG
    , contributor
    Comments (2823) | Send Message
     
    Well then you would think Panasonic and others would be chomping at the bit to get in on it ASAP. But apparently they aren't.
    27 Mar 2014, 11:27 AM Reply Like
  • Ford Prefect 1969
    , contributor
    Comments (2267) | Send Message
     
    @David RG

     

    Why is that?

     

    What is in it for Panasonic to participate in a battery cost reduction program?

     

    If you know kindly spill the beans because I can't work it out.
    27 Mar 2014, 11:37 AM Reply Like
  • David RG
    , contributor
    Comments (2823) | Send Message
     
    Because the 'giga' factory is the key to unlocking demand for 500,000+ Tesla car volume, which is 20 TIMES the current demand level, not to mention opening up the energy storage market. So, if this is the case, $2 billion is nothing for the opportunity to participate in such a vast market.
    27 Mar 2014, 12:03 PM Reply Like
  • seeker34567
    , contributor
    Comments (205) | Send Message
     
    If Panasonic allows this Tesla opportunity to pass they would be swept away in the battery competition of the future. They are in a catch 22 situation because of the Tesla car innovation and its tsunami effect. They either have to surf the huge wave or be wiped out of the battery business. We know if they don't join in, they will never get another Tesla order. This battery business will be dominated by Tesla, like it or not. It's like the old little Google.com and their newly innovated search engine who later on bought youtube.com and other social media to become the giant they are now.

     

    Also, Tesla will not make official announcement of the g-factory deal until everything in paper is completed with Panasonic or whomever. True to their form, they will just make a surprise announcement.

     

    Stay tuned.
    27 Mar 2014, 12:11 PM Reply Like
  • portatopia
    , contributor
    Comments (1449) | Send Message
     
    "The battery plant lowers the cost of batteries by at least 30 percent."

     

    jimr1 - could you show us how the 30% number was derived?
    27 Mar 2014, 02:29 PM Reply Like
  • MarketLost
    , contributor
    Comments (2912) | Send Message
     
    @Porta, Elon told him, so don't question it. ;-)
    27 Mar 2014, 05:35 PM Reply Like
  • jimr1
    , contributor
    Comments (112) | Send Message
     
    While the at least 30 percent cheaper is from Musk, it is easy to check. Do a Google search and you can find the generally accepted 0.6 exponent applicable to size increases in process industries. When I had the job of preparing financial justifications for new projects to the board of directors of a major chemical company, we always checked the numbers against this industry standard.
    29 Mar 2014, 11:45 AM Reply Like
  • Frank Greenhalgh
    , contributor
    Comments (3944) | Send Message
     
    Panasonic also has Toyota as its customer for the Prius batteries, maybe they don't want to upset Toyota. To invest one or two billon is big even for a company like Panasonic, and if they can't do it no one else will!
    27 Mar 2014, 08:23 AM Reply Like
  • pensaman
    , contributor
    Comments (214) | Send Message
     
    http://bit.ly/1m85zGv
    Panasonic appears to have high hopes for its fuel cell, with the company set to complete a production setup in the 2013 financial year that will boost production capacity 50 percent to more than 15,000 units per year.

     

    The new model Ene-Farm home fuel cell will be available in Japan from April 1, 2013.

     

    Toyota, Honda and Huyndai use LiIonBattery + Fuel cells as a range extender for 300 to 400 mile range with 100KWatt capacity fuelcells. Panasonic or Tesla does not have a guranteed high power battery yet.. That is why Panasonic will back off.
    27 Mar 2014, 09:31 AM Reply Like
  • Frank Greenhalgh
    , contributor
    Comments (3944) | Send Message
     
    Panasonic also only made 1billion total last year.
    http://bloom.bg/1iDutge
    27 Mar 2014, 08:34 AM Reply Like
  • AlphaCoils
    , contributor
    Comments (362) | Send Message
     
    Hmm, who else might need some batteries? GOOG? AAPL? Could they spare a few $bil?
    27 Mar 2014, 09:05 AM Reply Like
  • Tales From The Future
    , contributor
    Comments (7385) | Send Message
     
    It's also about the expertise, not just the money. There are very few companies globally who know was much about manufacturing batteries. Panasonic is therefore in the driver's seat in the negotiations, GOOG and AAPL can't help there.

     

    (PS: AAPL already has excellent battery suppliers in Asia)
    27 Mar 2014, 09:36 AM Reply Like
  • Johnny04
    , contributor
    Comments (172) | Send Message
     
    There are also very few companies who know much about manufacturing rockets or long range electric cars.
    28 Mar 2014, 11:35 PM Reply Like
  • French battery specialist
    , contributor
    Comments (69) | Send Message
     
    Tesla wouldn't exist without Panasonic. The quality and safety of Li Ion cells, is the main problem for Tesla if they don't want to have too mainy battery problems, especially when you have 4000 cells in a car, there is higher risk of failure. And only Panasonic can handle that in Li Ion at the moment ... Others like volt have something like 100 cells only, what is easier in terms of reliability of the battery.
    They can try another supplier if they want, these cells are standard size!

     

    I know Panasonic and Japanese a bit and I can tell you that they would never invest if they are not sure of production numbers in the future ...
    Battery suppliers know what are HEV or EV projects failures in automotive industry. They all came from exagerated future sales numbers ... What seems to be the case with Tesla also ...

     

    Large cells makers like for Volt have already reserved production and exlusivity from other OEMs.
    27 Mar 2014, 09:16 AM Reply Like
  • MarketLost
    , contributor
    Comments (2912) | Send Message
     
    @FB, but what about all Tesla's patents?? Does that mean they don't really have the expertise that the bulls say?? :-(
    27 Mar 2014, 05:37 PM Reply Like
  • blanck1
    , contributor
    Comments (59) | Send Message
     
    Good corporate management must view the risks of an investment in a cold, methodical way, unlike the emotional factor that creeps into investor decisions. Why would Panasonic risk billions on a plant whose output in 4 years is in question. There is no clear demand at this point and there may never be. Better for Panasonic if it just expands its own capacity based on demand rather than set up a competitor.
    27 Mar 2014, 09:31 AM Reply Like
  • Ford Prefect 1969
    , contributor
    Comments (2267) | Send Message
     
    Factually Tesla knows much more about the insides of batteries than the market is generally aware of. They don't need Panasonic either for expertise or capital.

     

    However I also cannot yet see the benefit to Panasonic in joining this project (Tesla has not explained it to my satisfaction).

     

    I also cannot see how the gigafactory is supposed to deliver optimum cost savings if it has to take the ROI considerations of investment partners into consideration. (Tesla has not explained that to my satisfaction either).

     

    I expect that Musk knows what he's doing and that very satisfactory answers will be forthcoming.

     

    In the mean time, shorts, here is your golden ticket.

     

    Have at it.
    27 Mar 2014, 09:47 AM Reply Like
  • MarketLost
    , contributor
    Comments (2912) | Send Message
     
    Ford, this is off topic, but I'm curious - have you liquidated your position? I honestly don't like to see people lose money - even if we disagree, I'm not a bear.
    27 Mar 2014, 05:39 PM Reply Like
  • Johnny04
    , contributor
    Comments (172) | Send Message
     
    The way I see it is that Panasonic would not want to expand their production now to meet Tesla's needs if they're going to be cut off a few years later. If they're partners, they can balance out the supply and demand between factories. So I believe Musk was being nice to include Panasonic, to avoid panic in the market, and to avoid burning bridges he's still half way crossing. It would not be wise for Panasonic to meet Tesla's demand now and not be part of the gigafactory, because when Elon wants to disrupt a market, he will. He has the will, the resource, and the capital to do it.
    29 Mar 2014, 07:30 AM Reply Like
  • John Bingham
    , contributor
    Comments (1252) | Send Message
     
    Johnny,

     

    Whatever happens it is unlikely that Panasonic will be "cut off". Tesla's Gigafactory is planned to be producing 35 GWh of cells by 2020 but Tesla will need an additional 15 GWh to be bought in at that time (50 GWh total in their pdf). Assuming the same 3.4 Ah, 3.6V cells we have today that 15 GWh translates into about 1.2 billion cells in ONE YEAR!

     

    The current contract with Panasonic is for 1.8 billion cells ramping up from the current level over a four year period, and even if Panasonic chooses to remain independent from the Gigafactory it is more than likely that they will continue to be Tesla's primary, if not sole, external supplier. That extra 15 GWh may be just an extension of the current contract with a similar projected rate of increase year on year.

     

    To put that in perspective Tesla will have used in the region of 150 million cells last year and will expect to use some 240 million this year for the cars alone. Add a little more for storage systems and drive trains manufactured for other auto companies and the numbers make sense.
    29 Mar 2014, 09:51 AM Reply Like
  • AlphaCoils
    , contributor
    Comments (362) | Send Message
     
    Hmmm. at the heart of it a battery cell is just a metal capsule containing an electrolyte with an anode on one end and a cathode at the other. Don't you think Tesla could do this entirely on it's own if it wanted to? This is considerably less complex than what Tesla is building in their Fremont plant and the rockets that SpaceX is building. Also consider that the battery that Panasonic builds is highly customized for Tesla. Tesla already owns at least half of the IP that went into it as they designed it!
    27 Mar 2014, 10:06 AM Reply Like
  • chickensevil
    , contributor
    Comments (743) | Send Message
     
    One: The design process to building a cell with high efficiency and low failure rate is not quite as simple. Panasonic has had many years to work on this. Knowing how a battery works and is put together is different from making it happen.

     

    Two: Knowing what the annode and cathode is composed of it one thing... but that is actually the simple part of the battery. What is not so simple, and what is likely kept under lock and key by Panasonic (which is what makes their batteries so good) is the "secret sauce" in the electrolyte. While the root chemical is likely known, the additives would very likely be kept under guard. This is primarily where most of the breakthroughs in Lithium batteries has come from, and some of the best batteries have a chemical combination of 4+ additives in the electrolyte. If Tesla is aware of this information, I would say they might have enough of the puzzle to build their own batteries... If they don't, then they need Panasonic.

     

    Anyway, this electrolyte fluid is what contributes to long battery life and a reduced degrade performance. (Basically, the whole 6,000 recharge cycles, and what drops the battery from holding a 100% charge down to 95% charge).
    27 Mar 2014, 11:38 AM Reply Like
  • AlphaCoils
    , contributor
    Comments (362) | Send Message
     
    You do realize that Tesla designed the electrolyte and Panasonic is building to to their spec right?
    27 Mar 2014, 11:42 AM Reply Like
  • Ford Prefect 1969
    , contributor
    Comments (2267) | Send Message
     
    @chickens

     

    "If Tesla is aware of this information, I would say they might have enough of the puzzle to build their own batteries"

     

    Not only is Tesla aware of it, Tesla has one of the worlds leading accelerated testing labs for additive discovery headed by one Dr Aaron Smith alongside an entire electrochemistry team.

     

    Also - if they can hire Chris Porritt from Aston, I am quite sure they can hire an experienced designer of 18650 production lines.

     

    The principles of process and production control are very well understood in industry. Tesla has a distinct advantage in that it only really needs to make one kind of product for one customer (itself). This slashes the cost and complexity of trying to make different stuff for different customers.

     

    Make lots of reliable copies of exactly one very simple thing. This is a dream assignment compared with difficult engineering challenges that exist in the world.

     

    Tempted to rave on about it.

     

    Make some metal foils of consistent thickness (laser calibrated presses for that). Optional - maybe do some surface etching on them - just run them through acid and caustic baths.

     

    Make consistent slurry and electrolyte mixtures and don't contaminate them (vats, sensors and ptfe pipes for that). Coat the slurry mixtures on metal foils with consistent thickness heat and pressure applied (laser calibrated presses, thermostatic controls and flow sensors for that). Do that on two separate sheets, and run them through a cutter to make weldable tabs stick out.

     

    Put a plastic sheet with microscopic holes in it in-between and roll it up. Crimp or weld the sticking out tabs together. Put it in a can and crimp or weld one of the terminals to the side of the can. Inject some electrolyte. Put a special cap on it, solder the other electrode to the cap. Send it off to initial charge formation and simultaneous automated QC.

     

    Repeat.

     

    Note: Mankind is capable of churning out microprocessors and memory chips, this is nothing like as complicated. This is closer to the technology of making 3-ply toilet paper. If you could buy that evenly pre-soiled in a can then you'd be almost there.
    27 Mar 2014, 12:12 PM Reply Like
  • chipdoctor
    , contributor
    Comments (2554) | Send Message
     
    Hi FP,

     

    I suspect that Tesla learned much about battery assembly technology from Panasonic, in which they may face some patent ligation if they decided to build their own (without Panasonic).

     

    I suspect there are also some trade secrets on the assembly as well.

     

    Anything appears simple to make, until you take ownership of doing so. Then you find out the challenges that keep existing suppliers in business.
    27 Mar 2014, 01:41 PM Reply Like
  • MarketLost
    , contributor
    Comments (2912) | Send Message
     
    <<You do realize that Tesla designed the electrolyte and Panasonic is building to to their spec right?>>

     

    To my knowledge, you are the only one who has made this claim. Japanese companies are well known for using their own proprietary chemicals, and Tesla has stated they aren't experts. Can I ask where I can find confirmation?
    27 Mar 2014, 05:45 PM Reply Like
  • seeker34567
    , contributor
    Comments (205) | Send Message
     
    chipdoctor,

     

    Isn't Panasonic going to worry about Samsung taking the venture with Tesla? Whoever gets the contract with Tesla is going to be the main supplier for the Tesla cars. The other one falls by the wayside.

     

    Capitalism is really a good thing if used correctly.
    27 Mar 2014, 07:40 PM Reply Like
  • MarketLost
    , contributor
    Comments (2912) | Send Message
     
    @seeker

     

    << Isn't Panasonic going to worry about Samsung taking the venture with Tesla? Whoever gets the contract with Tesla is going to be the main supplier for the Tesla cars. The other one falls by the wayside.>>

     

    Panasonic isn't going to be taken by the hype. They will evaluate this just as they evaluate all capital projects they could undertake. The same goes for LG, Samsung, or any other company that could provide batteries. Panasonic has a duty to its stakeholders, not to Tesla's.
    27 Mar 2014, 09:46 PM Reply Like
  • Ford Prefect 1969
    , contributor
    Comments (2267) | Send Message
     
    @Alpha

     

    The basics of an NCA cell are common knowledge.

     

    All of the materials to make this cell type are off the shelf.

     

    What is less well known is that Tesla has a state of the art department dedicated to dealing with cycle life at the cell level (Headed by Aaron Smith).

     

    On the one hand this is a QA department but it performs exactly the same function required of a cell level R&D lab.

     

    There can be no doubt that Tesla has access to leading electrochemists - there is scant information around the internet of Tesla hiring electrochemists to their Cell Engineering Team and it is clear that they are actually handling cell chemistry in-house:

     

    http://bit.ly/Qn2TL2

     

    As for the production line machinery to make 18650s, these can be purchased and or designed at will. It is not complicated.
    28 Mar 2014, 08:37 AM Reply Like
  • Frank Greenhalgh
    , contributor
    Comments (3944) | Send Message
     
    Tesla has not got the knowledge or industrial contacts to put together a factory. They also have ntgot enough cash to build one alone. Also as the demand for LI-ion batteries increases, so will the cost of Lithium and Cobalt. Maybe the Gigafactory will not Even give the 30% savings predicted.
    27 Mar 2014, 10:11 AM Reply Like
  • AlphaCoils
    , contributor
    Comments (362) | Send Message
     
    I don't believe that. Just take a look at the Fremont factory! Totally amazing and state of the art. Also with Larry Page recently saying he was considering giving billions to Elon just to make the world a better place, don't you think Elon has many other places he could go to access the cash? How many other friends does he have in high places who might be willing to swoop in and help? I don't think for a second he will need that but it's always a bottom line option.
    27 Mar 2014, 10:23 AM Reply Like
  • David at Imperial Beach
    , contributor
    Comments (4382) | Send Message
     
    You're underestimating Tesla capabilities by just a tad, don't you think? Not the knowledge? Not the industrial contacts? Not the cash?

     

    Tesla would admittedly like Panasonic's cooperation, no doubt about it. But if they don't get it, it won't be a show-stopper. They are still free to hire more talent and reach out to lower level suppliers and even raise more bonds, or (gasp) earn enough money through Model S and Model X sales. It might set them behind schedule, but the gigafactory will get built one way or another.
    27 Mar 2014, 10:31 AM Reply Like
  • MarketLost
    , contributor
    Comments (2912) | Send Message
     
    @Alpha, I believe that Larry Page made his remarks in the context of who he would leave his money to if he were to suddenly die. This isn't the same as saying he would invest his money in Elon, which he certainly had plenty of opportunity to do.
    27 Mar 2014, 05:47 PM Reply Like
  • AlphaCoils
    , contributor
    Comments (362) | Send Message
     
    Right, I'm just saying that I could see that being a back stop option if Elon couldn't get the money from anywhere else.
    28 Mar 2014, 09:12 AM Reply Like
  • Ford Prefect 1969
    , contributor
    Comments (2267) | Send Message
     
    I thought the Larry Page thing was a bit disturbing.

     

    Either he's seriously ill or I wonder why he would hold out to the day he dies not to use his money as an enabler for the things he says he wants to see happen.

     

    If I had $10 bn to spare while retaining another $20bn in case of a rainy day, I think I might like to see some good come of it rather than miss the party.

     

    Most likely Larry page was pitching an audience to leave their money to corporate good causes rather than specifically offering his own.
    28 Mar 2014, 03:02 PM Reply Like
  • 123man
    , contributor
    Comments (1605) | Send Message
     
    I suspect that the same thing was said about Tesla when it came to buying/building out the Fremont factory and production line - I am also sure the same has been said about the Space X facility - and the same continues to be said "Elon Musk, Tesla, Space X and SolarCity cannot do what they are doing" - as Ford suggests, now is the time for the shorts to pile in -
    27 Mar 2014, 10:24 AM Reply Like
  • French battery specialist
    , contributor
    Comments (69) | Send Message
     
    @Ford perfect

     

    I can tell you all comments on this page are really accurate. I believe some other battery pros / automotive financial pros are talking about what they know.
    Panasonic cell is already old, not so much gain possible as the process has been already optimized ...

     

    I agree:
    The real difficult work is to make power Li-Ion batteries (with a lot flammable electrolyte) so they can work either in HEV, range extender or with fuel cell.
    The trend for development is power cells, not energy cells.
    Especially know that we know supercaps are not so good in terms of calendar life.
    Only 2 automotive quality power cells exist at the moment, but in NiMH, because no flammable electrolyte for Prius (PEVE now primearth own at 70% by TOYOTA) and SANYO, the ex world leader of NiMH, that was bought by, guess who, Panasonic!

     

    I suppose Panasonic will do the generation of power cells for TOYOTA.

     

    In electricity world (and electronic) the king is the guy who owns key components, and to do that, Japanese invest massively and take - the whole market - to facilitate that, interest rate is really low for a few big companies (trusts)... And Japanese people accept deflation and accept investment in economy by buying japanese bonds ... They are hyper nationalistic ...

     

    Because they want all the market (like american tycoons !) they need to massively invest in their economy !
    Japanese would have problems to invest in America for key components ...

     

    That is historical behaviour of Japanese companies and they are right, it is the game. They already have 10 years advance compared to TESLA ...

     

    We never know, time changes ...
    27 Mar 2014, 10:47 AM Reply Like
  • Ford Prefect 1969
    , contributor
    Comments (2267) | Send Message
     
    F BS

     

    No idea what point you are trying to make.

     

    NCA is a mature technology and it is really good for power, energy density, cycle life and to a sufficient extent safety.

     

    The innovation required is massive economy of scale and vertical integration for cost reduction. None of that is rocket science - except for the fact that Musk has applied the same basic strategy at SpaceX to reduce the cost of rocket launches from $380m to $60m.

     

    Tesla is also working on rechargeable range extenders in the form of metal air rechargeables.

     

    I don't see any major problem in doing any of this. What I cannot see clearly is why they need to deal with Panasonic in the process. It may simply have been the polite thing to have done to invite them in and let them politely decline so as not to hack them off during the existing supply contract by declaring war on them as a competitor.
    27 Mar 2014, 11:08 AM Reply Like
  • chipdoctor
    , contributor
    Comments (2554) | Send Message
     
    Hi FP,

     

    Many in the battery industry think your promotion of a metal air rechargeable (for near term EV usage) may be a bit more than rocket science...

     

    Time will tell how good NCA is for EVs.

     

    I agree with French BS (sorry about the abbreviation), Panasonic has various chemistries for use in Hybirds/EVs (don't rule out NiMH completely, it has a better cost structure and is safer).

     

    There is little value for Panasonic to lock and load with Tesla for a limited market.
    27 Mar 2014, 01:22 PM Reply Like
  • Ford Prefect 1969
    , contributor
    Comments (2267) | Send Message
     
    @chipdoctor

     

    Many in the battery industry are clueless. The world is full of worthless experts in what cannot be done and you are quoting a typical example.

     

    What Musk does is to not look at how difficult other people find things, he has a system of working things out for himself.

     

    Should try it some time.

     

    Tesla has spent the time working out how good NCA is for EVs as well as engineering cells of this type into a system that is both highly functional and safe. That is why you are here expressing shock and disbelief. Had they failed then there would be no revolutionary company and stock.

     

    As for doing NCA on a grand scale with an optimum electrolyte and additives - Tesla has had years to figure that out.

     

    What I don't understand is the hypocrisy of the bear case. What makes you blindly believe that Panasonic (or GM or Toyota) can figure out something that Tesla cannot?

     

    This is a company that looked at SAP as an ERP system and decided they could do better themselves, and so they did.

     

    Another group of people under the same leadership are taking on Boeing and Lockheed Martin and trouncing them both technically and on costs in space flight. SpaceX just won some kind of covert operation for the Air Forcs in an article I saw today.

     

    Do you think Panasonic, GM or Toyota can do that too?

     

    Tesla has the demand for vehicles that need batteries. Tesla has the commitment to double the size of the battery industry. I would guess there is some kind of an opportunity there for Panasonic. Like it is by definition the biggest thing happening right now in the global battery market.

     

    I can't see exactly what value Tesla is offering (or should offer) to Panasonic either but you are dead wrong about the limited market. This is the least limited market there is when it comes to batteries, on the contrary it is the largest possible opportunity for expansion.

     

    All I know is that partners investing alongside Tesla will expect some kind of payback for their investment. If they charge margins on making batteries then that messes up the cost reduction objective. On that score I don't get it either.

     

    I think that Tesla should go it alone with this factory. But hey what do I know.
    27 Mar 2014, 07:54 PM Reply Like
  • Doc's Trading
    , contributor
    Comments (1847) | Send Message
     
    technical update..... Beware........my advise of yesterday is coming to fruition at this moment...namely if she goes out here, 210.25, with her present range we have the "reversal" that I have been looking for......Longs and shorts place your stops as advised yesterday.
    more later....
    27 Mar 2014, 11:02 AM Reply Like
  • MarketLost
    , contributor
    Comments (2912) | Send Message
     
    docs, I'm ahead of you, I predicted a blow-off top about two weeks ago, but there could be a dead-cat bounce if it recovers tomorrow. However, I think we would be lucky to reach above $225.
    27 Mar 2014, 05:50 PM Reply Like
  • chipdoctor
    , contributor
    Comments (2554) | Send Message
     
    For those familiar with Japanese culture -- unlike Americans, the Japanese have a hard time saying no. A "hasn't committed" comment means there is much more investigation to be done, especially when the partner is not a Japanese company.

     

    If I was Panasonic, I would sell my good cells to the roughly 10M hybrids that will be sold in 2020, instead of a 100K EVs at a much lower price. Its not a smart financial decision to invest capital funds to drive down profit margin.
    27 Mar 2014, 01:15 PM Reply Like
  • arondaniel
    , contributor
    Comments (1673) | Send Message
     
    "Its not a smart financial decision to invest capital funds to drive down profit margin."

     

    Maybe... but if the "gigafactory" leads to further commoditization of a certain type of battery isn't it even worse to remain a higher-cost supplier?
    27 Mar 2014, 05:34 PM Reply Like
  • MarketLost
    , contributor
    Comments (2912) | Send Message
     
    Chip, I was surprised at Elon's push without Panasonic, as the Japanese don't move quickly. I've dealt a lot with Panasonic, Sharp, Sanyo, and others as suppliers. They are very deliberate, and they don't like to move without a great deal of thought.
    27 Mar 2014, 05:53 PM Reply Like
  • Ford Prefect 1969
    , contributor
    Comments (2267) | Send Message
     
    "They are very deliberate, and they don't like to move without a great deal of thought."

     

    Which you can see on their financial statements, excepting the gift of profits forced on them by Tesla.
    27 Mar 2014, 07:59 PM Reply Like
  • MarketLost
    , contributor
    Comments (2912) | Send Message
     
    @Ford, do you mind pointing out where this shows up in their financial statements? I've looked over them, and I don't see any line item devoted to Tesla.
    27 Mar 2014, 09:48 PM Reply Like
  • Ford Prefect 1969
    , contributor
    Comments (2267) | Send Message
     
    @ML

     

    You are very tiring troll.

     

    http://bit.ly/1iFZHn5

     

    The dark blue bit (panasonic) commencing Q3 2012 = Tesla.

     

    If you need more please google it yourself.
    28 Mar 2014, 12:31 AM Reply Like
  • MarketLost
    , contributor
    Comments (2912) | Send Message
     
    Ford, you insist that Tesla has an impact on the bottom line, and your produced nothing to show this, but a graph about battery sales. Worse, Panasonic is the lowest player, so if Tesla is so great, why are they lagging?

     

    Again, please produce the evidence of where it shows up on their financials. Or at least admit your inability to do this.
    28 Mar 2014, 12:35 AM Reply Like
  • Ford Prefect 1969
    , contributor
    Comments (2267) | Send Message
     
    "please produce the evidence of where it shows up on their financials"

     

    If you understood the question you are asking you would know that earnings are between rarely and never broken out by customer except perhaps as a footnote.

     

    You will just have to take Panasonic press releases on face value.
    28 Mar 2014, 03:05 PM Reply Like
  • apple pompon
    , contributor
    Comment (1) | Send Message
     
    There is a roumor in japan that tesla might have a contract with a small quantum battery making Japanese company not panasonic who makes lithium battery that catches fire.
    28 Mar 2014, 12:05 AM Reply Like
  • MarketLost
    , contributor
    Comments (2912) | Send Message
     
    Are you saying the small battery maker has batteries that catch fire? Why would Tesla pair with them?
    28 Mar 2014, 12:09 AM Reply Like
  • Ford Prefect 1969
    , contributor
    Comments (2267) | Send Message
     
    oh wow, a rocket powered quantum electric car with realistic flames

     

    Surely he can't be serious eh ML?

     

    Something juicy for the shorts to hang their hats on - this could be good.
    28 Mar 2014, 12:36 AM Reply Like
  • MarketLost
    , contributor
    Comments (2912) | Send Message
     
    Wow, Ford, no I think the bulls will run with this to make your position profitable, finally. You need to spread the word.

     

    You did miss the tongue-in-check, I see.
    28 Mar 2014, 12:39 AM Reply Like
  • French battery specialist
    , contributor
    Comments (69) | Send Message
     
    @ Ford Perfect
    If I remember well - so please forgive me if I am wrong - and I don't have time to verify my sources. Panasonic was offering these cells to anyone 5 years ago because they developped them and it was not working ...
    Additionnally I remember the Prius chef making public apologies because he didn't choose the good techno in Li-Ion and I think he was talking about Panasonic.
    The reason he gave - if I still remember well - was high price and less good safety. (compared to NMC or LIFePO4?)

     

    --> They
    28 Mar 2014, 06:12 AM Reply Like
  • Ford Prefect 1969
    , contributor
    Comments (2267) | Send Message
     
    @FBS

     

    Pretty sure Panasonic was (and is) offering some version of NCA to the broad market.

     

    It is equally clear that the thing they are doing for the Tesla Model S is proprietary to Tesla.

     

    The claims of using commodity cells dates back to the Roadster.
    28 Mar 2014, 03:09 PM Reply Like
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