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Tesla and Panasonic have suspended plans to expand the battery capacity production of Gigafactory 1 in Nevada amid concerns that demand for Tesla’s electric vehicles may be weakening, business news outlet Nikkei Asian Review reported on Thursday, without specifying its sources.
According to Nikkei, Tesla and Panasonic—which is producing the battery cells at Gigafactory 1 that Tesla later uses in the battery packs for its vehicles—had plans to increase the battery capacity by 50 percent by 2020.
According to Tesla, in the middle of 2018, battery production at Gigafactory 1 reached an annualized rate of around 20 GWh, making it the highest-volume battery plant in the world.
“Tesla currently produces more batteries in terms of kWh than all other carmakers combined,” the EV maker says.
However, Tesla and Panasonic have now decided to freeze major investments in expanding the Gigafactory 1 capacity because EV sales have been below expectations, Nikkei reports.
So far, Tesla and Panasonic have invested US$4.5 billion in Gigafactory 1.
According to Nikkei, Panasonic will also freeze investment in Tesla’s battery and EV plant in Shanghai, providing technical support and a small number of batteries instead.
“We will of course continue to make new investments in Gigafactory 1, as needed,” Tesla said in a statement to CNBC, commenting on the report.
“However, we think there is far more output to be gained from improving existing production equipment than was previously estimated,” Tesla added.
The report about moderated expansion plans for Gigafactory 1 comes a week after Tesla reported lackluster vehicle deliveries numbers for the first quarter of 2019.
While Tesla was working hard to ramp up production of Model 3, the EV maker faced challenges in deliveries and its total vehicle deliveries in the first quarter slumped by 31 percent from the previous quarter and were well below analyst estimates.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.