Tesla Gigafactory expansion reportedly on hold as Panasonic ponders the future

Tesla and Panasonic hit the brakes on battery expansion

Tesla Gigafactory expansion reportedly on hold as Panasonic ponders the future

Another interesting line in the report is that Panasonic is also scaling down its planned investment into the upcoming Shanghai plant that Tesla is now underway constructing.

The analyst maintained his stance that Tesla's battery costs were too high for the company to achieve its aggressive targets for ramping up volume, as the cost made the cars too pricey for consumers. The report claimed that Panasonic froze a decision to put another $900 million to $1.35 billion into the Nevada Gigafactory.

Panasonic has invested heavily in production facilities alongside Tesla, and as its battery partner, is considered the company's most important vendor.

Tesla's (NASDAQ:TSLA) stock was down more than 8 points to $267.68 in Thursday's early session on reports the company's Gigafactory 1 (G1) expansion plans with Panasonic are on hold.

Lower-than-expected auto deliveries by Tesla in the first quarter spooked stock and bond investors earlier this month, adding to Wall Street's concerns about its future cashflow. Meanwhile, Panasonic told Reuters that it will "study additional investments over 35GWh in collaboration with Tesla" depending on demand.

"We will of course continue to make new investments in Gigafactory 1, as needed". The report claimed that Panasonic wanted to reduce its dependence on Tesla. Panasonic also produces solar cells for the company's solar roof panels. It says it will deliver between 360,000 and 400,000 vehicles in 2019.

The two companies had initially set out to raise capacity at the Nevada Gigafactory by 50% by 2020, but "financial problems" have forced a re-thinking of the situation, Nikkei said. The hiccup in the relationship comes on the heels of Elon Musk suggesting Tesla would look to multiple battery suppliers for its Shanghai factory, along with the automaker missing its Q1 2019 production goals. For their part, Panasonic supplies the cells, while Tesla converts them into battery packs. By this, Musk will have to re-think of a new strategy to make his dream of becoming the world's premier EV manufacturer into reality.

Tesla shares fell more than 2 percent in trading Thursday. Tesla is expected to report first-quarter earnings on April 24, this is expected to be a key report for the company.

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