TOKYO — Panasonic outperformed the forecasts of most analysts and reported on July 31 a 28 percent increase in operating profit for the latest April-June quarter. The Japanese company, on the same day, announced that it has signed a deal with Tesla on a large-scale battery plant in the United States, known as the Gigafactory.
The announcement comes as no surprise to the automotive industry, since Elon Musk had been publicly courting Panasonic -- which already supplies batteries to Tesla -- to join Tesla in building a lithium-ion battery factory.
One glaring omission in a joint press release prepared by the two companies, however, is exactly how much Panasonic is prepared to shell out in its Gigafactory investment.
Tesla previously said that it will invest up to $5 billion in the factory by 2020, with plans to churn out enough lithium-ion batteries each year to power 500,000 electric vehicles.
Under the agreement, Tesla will pay for land, buildings and utilities. Panasonic will only have to foot the bill for the machinery needed to make the battery cells. Still under discussion are details on implementation, including sales, operations and investment, according to the press release.
The joint press release also noted:
The Gigafactory will produce cells, modules and packs for Tesla's electric vehicles and for the stationary storage market. Plans call for the Gigafactory to produce 35GWh of cells and 50GWh of packs per year by 2020. Tesla projects that the Gigafactory will employ about 6,500 people by 2020.
Tesla appears to believe that the Gigafactory won’t be able to produce enough batteries to meet the projected demand for cells. Tesla, according to the press release, will continue to purchase battery cells produced in Panasonic's factories in Japan.
All eyes are now on Panasonic, awaiting its next move.
The question both inside and outside the Japanese company is this: how big an albatross might the Gigafactory become for Panasonic — in short, medium and long terms.
Some Japanese electronics industry sources question the wisdom of going all in with Tesla. As sexy as this partnership might sound, Tesla, in Japanese eyes, is no Toyota.
Next page: Déjà vu?