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Tesla, Panasonic Pull Back On Gigafactory Investments

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Tesla, Panasonic Pull Back On Gigafactory Investments

Wall Street’s fears over weakening Tesla Inc (NASDAQ: TSLA) demand are dampening progress.

What To Know

According to Nikkei, Panasonic has suspended its investment in Tesla’s Shanghai plant and will instead provide mere technical support and batteries from Gigafactory 1. At the same time, it has also decided with Tesla to freeze spending to expand Gigafactory 1, which has manufactured Model 3 batteries since 2017.

The partners had planned to grow plant capacity from 35 gigawatt hours per year to 54 GWh by 2020 and have already sunk $4.5 billion into the expansion, but they are stunted by financial constraints.

Why It's Important

The retreat is a notable change in trajectory. Just six months ago, Panasonic said it was considering additional investment in North America. Reports suggested another $900 million to $1.35 billion could pour into the Gigafactory.

However, the cell maker has posted major losses from its Tesla EV battery business, including an operating loss above 20 billion yen in the 12 months ending in March.

What's Next

The companies plan to revisit their Gigafactory expansion plans in 2020 depending on Model 3 and Model Y sales at that time.

"We will of course continue to make new investments in Gigafactory 1, as needed," a Tesla spokesperson told Nikkei.

Tesla's stock traded lower by 3.3 percent to $266.89 per share Thursday morning.

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Posted-In: China Gigafactory Model 3 NikkeiNews Top Stories Media Best of Benzinga

 

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