Tesla, Panasonic Pause Expansion Of Gigafactory Amid Tesla Car Demand Concerns

Electric carmaker Tesla has declared that the recent report published in Nikkei Asian Review Report stating that its planned factory expansion proposal is on hold, as false. The factory proposal was declared last year amid great fanfare and is being set up in partnership with Panasonic which will be completed by 2020. The paper had reported that both partners are reconsidering their decision to increase the factory’s capacity by 50 % as demand for Tesla’s cars have been weakening in past few months. This news item led to sharp fall in shares of Tesla by 3 % during intraday trading this week.

Tesla’s factory located at Reno, Nevada manufactures battery packs for its cars and energy charging stations in partnership with Panasonic. Several vital parts of its popular low cost Model 3 are also made at this factory and during its last quarter directive to shareholders the firm informed that it’s recently launched crossover Model Y will also be manufactured here. This news items by Nikkei became public just a week after revelation of quarterly delivery numbers by Tesla that were way below expectations of Wall Street.  Tesla declared that the orders for its Model 3 sedans outpaced deliveries and its 2019 guidance for deliveries will be between 360,000 and 400000.

Tesla in its statement declared that both Panasonic and Tesla will continue expansion of its Gigafactory as planned as it will lead to increase in output. They are witnessing significant gains from upgrading production lines that exist now to improve output. This allows the manufacturers to achieve same output without spending much on equipment purchase. But they will continue their investments in Gigafactory 1 as and when required. It specified that contrary to what has been implied in Nikkei’s report their demand for cells still outpaces supply and it is the only constraint on vehicles of Tesla and production of Powerwall and Powerpack batteries.