Betting on Tesla paying off for battery maker
Panasonic is on the verge of turning a profit at the giant US battery factory it operates with Tesla, finally yielding returns for the Japanese company shelling out billions to make power cells for Elon Musk.
Panasonic already makes money on batteries for the Model S and Model X, which it produces domestically, says president Kazuhiro Tsuga. It is now ramping up output at the two-year-old Gigafactory in Nevada, which is dedicated to making batteries for the Model 3 but still losing money, he says. “We will be in a position to deliver profits at a very early stage,” Tsuga says, declining to specify a timeline. Panasonic’s investment in the Gigafactory will exceed 200 billion yen ($2.6 billion) once that expansion is done, Tsuga says. His bet on Tesla has been a source of concern for investors amid setbacks, as well as the delayed production of Model 3 sedans and the erratic behaviour of Musk. Tesla last week reported a surprise quarterly profit, inspiring optimism that the electric vehicle (EV) maker will become a sustainable business.
Panasonic produces cells, which Tesla uses to make battery packs for its EVs. The Osaka-based company has 11 production lines operating at the Gigafactory and is adding two more by the end of the year for a combined capacity of 35 gigawatt-hours. The company’s Tesla operations will begin to contribute to profit from the current quarter, Panasonic chief financial officer Hirokazu Umeda told reporters in Tokyo this week. Panasonic’s optimism comes amid predictions of a boom in battery making.
The global energy-storage market will surge to a cumulative 942 gigawatts by 2040, according to a forecast this week from Bloomberg New Energy Finance, and that growth will need US$1.2 trillion ($1.8 trillion) in investment. The sharply falling cost of batteries is a key reason for the expected boom, but cost isn’t the only factor. Governments are spurring demand, as is the rise of electric vehicles and solar power. There has also been more focus on storage for electric-vehicle charging as well as energy in remote areas.