What is going on with one of the world’s most well-known electric car manufacturers now? Is Tesla slowing down?
We previously reported a story on why Tesla’s sales numbers were looking down; a bad combination of outdated style, fluctuating prices, the smarter choice of buying used, and international sales. All of these smaller issues add up to show the general decline in Tesla’s business, at least in the past quarter.
But is there anything else going on?
Panasonic Suspending Investments in Tesla Gigafactory
As recently reported in the Nikkei Asian Review (an Asian business publication), the electric car manufacturer and its partner Panasonic have suspended plans to expand the capacity of Tesla’s Gigafactory 1 in Nevada. Panasonic may also suspend its plans to invest in Tesla’s integrated electric vehicle and battery plant in Shanghai. Instead it will provide a small number of batteries while also providing technical support from the Gigafactory.
However, Nikkei does not provide any sources to support this information, so such news should be taken with a grain of salt.
But whether or not the report is completely true, both companies have responded to it. Tesla maintains that new investments will be made in the factory as needed, but they believe that they should focus on improving existing equipment and increasing battery cell output before installing more battery production lines. Panasonic also acknowledged the report with caution, stating that it wants to watch the developing demand situation in the electric car market before making any more investments in expanding the Gigafactory 1.
Major Investment, Minor Financial Growth
According to Nikkei, Panasonic signed its first contract with Tesla in 2009. The following year the Asian battery giant invested $30 million in its new American partner. Altogether, Tesla and Panasonic have invested $4.5 billion in the Gigafactory 1, with Panasonic previously considering future investment in the Nevada factory to keep Tesla running at full speed. It reported that Panasonic was considering putting an additional 100 billion yen to 150 billion yen ($900 million to $1.35 billion) into the electric car manufacturer’s home facility.
But Nikkei also reported that Panasonic’s Tesla electric vehicle battery business was looking at operating losses over 20 billion yen ($180 million) in the fiscal year ending in March. These losses were not helped by the delayed start of production of the Tesla Model 3.
Tesla’s Slowing Down in Current Financial Standing
In the company’s last earnings call, Tesla CEO Elon Musk claimed that demand for battery cells has outpaced supply. This is despite the first quarter report that showed a nearly one-third drop in vehicle sales from the previous quarter. Tesla blamed this sales drop on shipping delays for the Model 3 to Europe and China.
Whether or not excuses are found for the decrease in sales, or even how much truth can be gleaned from Nikkei’s report, the fact of the matter is that Tesla’s financial health has taken a hit. It really does appear that Tesla is slowing down. After these reports hit the newsfeeds on Thursday, Tesla shares fell about 3% on the Nasdaq.
Tesla is expected to report its first quarter earnings on April 24. Let us hope that it contains better news.