Tesla gets Panasonic's help with ahead-of-schedule battery plant

(Bloomberg) — Panasonic Corp., the sole battery supplier for Tesla Inc.’s best-selling Model 3, is taking steps to help Elon Musk solve the “production hell” problem that has plagued the car that’s key to making profits.

The Japanese company had proposed to add three production lines at Tesla’s Gigafactory in Nevada by the end of the year. It’s now aiming to complete the plan ahead of schedule, Yoshio Ito, head of Panasonic’s automotive business, said in an interview Tuesday in Tokyo. Ito wouldn’t specify an exact date for opening the facility that feeds the Model 3.

“The bottleneck for Model 3 production has been our batteries,” Ito said. “They just want us to make as many as possible.”“They just want us to make as many as possible.”

The success of the Model 3, which Tesla eventually wants to sell for less than $40,000, is crucial for the Palo Alto, California-based company to maintain its lead in the EV race as marques such as Audi, Porsche, BMW and Mercedes-Benz are about to bring multiple models to the luxury electric-vehicle niche now dominated by the Model S and Model X. With the smaller Model 3 and eventually the Model Y crossover utility vehicle, Musk’s auto business is increasingly moving toward the mass-luxury market.

After factory glitches set back Tesla’s Model 3 output targets by about a year, Musk has stepped up efforts to get the program back on track, including flying in a production line from Germany on a cargo plane. In a blog post dated Sept. 7, he said Tesla is about to build and deliver more than twice as many cars as it did last quarter. Musk also revived a goal to make 10,000 vehicles a week sometime in 2019, a goal originally set for the current year.

Mass market

Panasonic produces cells, which Tesla uses to make battery packs for its EVs. The three new lines will bring the total to 13 with a combined capacity of 35 gigawatt hours at the Gigafactory, Ito said.

During a quarterly earnings call in November, Musk said the main constraint holding back the Model 3 has been on the assembly line that packages battery cells, which Musk blamed in part on a subcontractor that “really dropped the ball.”“Really dropped the ball.”

During the three months that ended in June, Tesla produced 53,339 electric vehicles and delivered 40,740 of them.

Tesla has initially planned to use 30 percent of the Gigafactory capacity to build energy storage systems, but the plant has to use all its capacity to produce electric-car batteries due to strong demand, according to Ito.

Panasonic also supplies batteries for plug-in hybrids made by Toyota Motor Corp. and Volkswagen AG. Panasonic has started a feasibility study into a rechargeable-battery venture with Toyota, which could spur battery sales growth for Toyota group companies. Ito said the two companies will announce specifics of their plan within this year, without elaborating.

(By Ma Jie, Masatsugu Horie and Yuki Furukawa)