The somewhat stormy relationship between Tesla and Panasonic is no secret, and it looks like we may not see improvement anytime soon. A new report by the Wall Street Journal reveals an increasingly strained relationship between the two companies, and while a culture clash may be somewhat to blame, the fact that Tesla is seeking to produce its own batteries probably does not help. Will Tesla and Panasonic’s bond manage to survive these rough times? What are causing the issues?
Part of the reason behind the strain may be because of cost. Tesla CEO Elon Musk is allegedly in constant contact with the CEO of Panasonic, Kazuhiro Tsuga, about reducing the price of the batteries which are supplied exclusively for Tesla. According to an unnamed Panasonic executive, Musk will go as far as calling Tsuga’s cellphone directly, in addition to emailing and texting him on the matter.
The Japanese battery maker will not budge, however, and has even threatened to pull Panasonic out of the Gigafactory in response.
Then there are timeline issues– generally on the part of Tesla. Musk is notorious for missing or moving deadlines, but when another company is pulled into the mess, they inevitably suffer as well. Time and time again Panasonic has rushed to meet Tesla’s production goals only to discover that the auto manufacturer was behind schedule.
When Musk tried to bump up Tesla’s production goal of manufacturing enough batteries for 500,000 vehicles two years early, Panasonic was forced to scramble in an attempt to catch up. This caused all sorts of unexpected stress, expenses, and additional work for the battery maker.
Then earlier this year when Panasonic ran into safety issues with a high-speed production line that Tesla demanded it build and had to slow production in order to sort them out, Musk accused it of limiting Model 3 production.
What the Wall Street Journal seems to focus on most in their article, however, is the clash of culture between a century’s old, conservative Japanese corporation and a 16-year-old American company with an eccentric CEO and a history of bucking tradition.
Elon Musk’s often heated comments and occasional strange behavior worry his Japanese investors. When Musk shared a joint with comedian Joe Rogan during a live video interview in September of 2018, Panasonic executives watched in alarm. The use of marijuana is a serious crime in Japan, one that often forces celebrities to apologize publicly if they are caught using it.
Musk’s micro-managing also rubs Panasonic the wrong way. The Tesla CEO seems to need to control almost everything that occurs in the company, while Panasonic is used to giving its units a certain amount of autonomy. The frustrating management structure is enough to make Panasonic’s CEO travel to the U.S. every quarter to meet Musk personally, in an attempt to keep things running smoothly.
Who Makes The Batteries? Tesla Or Panasonic?
What the Wall Street Journal failed to mention is also what is likely driving the largest wedge between the two companies: Tesla’s desire to manufacture its own batteries. Tesla wants to create its own batteries and cut out the middleman, essentially putting Panasonic out of a job. The problem is if Tesla has not yet reached the point where it is able to do so on a large-scale basis, losing its primary provider could mean shooting itself in the foot. With no reliable supplier of batteries, there will be no Teslas rolling off of the production line to sell.
Tesla just quietly purchased another battery manufacturer. Hibar Systems, which specializes in high-speed battery manufacturing for electric vehicles, could help Tesla to produce battery cells in house. Considering that it is the second battery company acquired by Tesla this year, it is no great wonder that Panasonic is a little unhappy.