Why is Panasonic investing to produce batteries for Tesla?

Tesla has been the bell weather of sustainable mobility & storage in a world riddled with Climate Change linked problems

Cross Section of an Electric Vehicle

As batteries form the most expensive part of an electric vehicle, Tesla has tried for several years to decrease the cost of its battery cells to move closer to price parity with gas vehicles since the commercialization of its Electric Vehicles.

Cost Metric of Battery Pricing for Tesla v/s Others

In September 2020, Tesla CEO Elon Musk and Vice President of Technology Drew Baglino have unveiled a new 4680 battery cell during its “Battery Day” event. This cell was meant to create a more affordable electric car.

The new tabless battery design was meant to

  1. Increase the energy density(by five times), power(by six times), and range(by sixteen percent) for its electric vehicles
  2. Increase manufacturing efficiency, leading to decreased cost per kilowatt-hour
Launch of 4680 Battery Cell on “Battery Day” in 2020

While Tesla itself is planning mass production of these 4680 battery cells at the company’s Kato Road pilot facility in Fremont, Panasonic also launched its 4680 Battery Cells in order to service the need of Tesla & other players in October 2021.

Different Lithium-Ion Batteries Produced by Panasonic

The decision of Panasonic is based on the rationale that Tesla is going to need so many 4680 cells that it will need to partner with current battery suppliers along with the in-house facility.

Placement of the new 4680 Cells in the Tesla EV Models

Accordingly, Nikkei reported on Monday(Jan 24th, 2022), that Panasonic will begin producing these 4680 cells at a plant in Wakayama prefecture(Western Japan) for Tesla from as early as 2023 with an investment of about 80 billion yen ($705 million).

Panasonic Manufacturing Centre in Japan

This was on expected lines as along with Panasonic, LG, Samsung, CATL, etc. have all also indicated that they aim to produce 4680 cells for Tesla as the EV manufacturer intends to buy every battery cell from the suppliers for the foreseeable future.

Positioning of Different Battery for EV manufacturers in 2020

Hope we see the outcome linked to this in the form of competitively priced Electric Vehicles in comparison to traditional IC Engine based Vehicles.

Look forward to hearing your thoughts.

You can follow my blog or Facebook page on investing for getting insight into other stocks.

References:

  1. https://www.usnews.com/news/technology/articles/2022-01-24/panasonic-to-invest-700-million-to-produce-new-batteries-for-evs-nikkei
  2. Panasonic will invest $705 million to launch Tesla 4680 battery production in 2023
  3. Tesla debuts new 4680 battery cell: 500% more energy, 6X power, range increase
  4. Panasonic is investing $700 million to produce Tesla 4680 battery cell by 2023
  5. Electric vs. Combustion Engine: What are the Differences?
  6. How Battery Costs Impact Tesla’s Margins: An Interactive Analysis
  7. Tesla adds structural battery pack reference to Model Y owner’s manual as production is imminent
  8. Tesla’s partner Panasonic to expand EV battery production in Japan
  9. Panasonic to make Tesla batteries in Japan after U.S. snag
  10. lg-vs-catl-lithium-battery-cell-market-september-2020-andy-lee — OROVEL

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Blog at WordPress.com.

Up ↑

%d bloggers like this: