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Panasonic Grows Wary Of Tesla Risks

Elon Musk Tesla

Panasonic is getting increasingly worried about its partner Tesla’s production-riddled, cash-burning ways, and may be less willing to make further commitments to the U.S. company beyond what it has already pledged for the Nevada gigafactory, Panasonic executives told the Nikkei Asian Review.

Tesla and Panasonic are partners in the gigafactory with the Japanese electronics giant committing some US$1.82 billion (200 billion yen) to the US$5-billion project until 2020. After that, however, Panasonic is not yet certain how much more it will commit. The decision, according to the executives, will be “based on a frank assessment of the situation.”

Panasonic is also wary of making any definitive comments regarding plans for a second gigafactory, to be located in China, in which Tesla assumes it will again partner with the Japanese company. However, following a first-quarter conference call that many called bizarre on the part of CEO Elon Musk, Panasonic executives made a point of noting that “nothing is set in stone” and nothing is “solidified yet.”

Tesla reported a record-high operating loss for the first quarter despite equally record-high revenues. Yet the financial and production performance of the EV maker is not the only reason Panasonic is wary of committing billions to the gigafactories.

Related: Bank Of America: Oil Prices Could Hit $100 Next Year

Another reason, according to the Nikkei Asian Review, is its scar from plasma displays. The company splashed US$4.57 billion (500 billion yen) on plasma display factories only to be forced to shut down the business when LCD displays emerged as the clear winner of this particular competition.

What’s more, in its EV battery business, Panasonic is facing growing competition from Chinese companies and will need to direct substantial resources to this fight. On the one hand, an exclusive partnership with Tesla could benefit the Japanese electronics maker, but on the other, the Chinese rivals are closing partnerships with many carmakers eager to expand in the EV market.

By Irina Slav for Oilprice.com

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