Tesla shares fall on report plant expansion has been iced

Tesla shares fall on report plant expansion has been iced

Tesla shares fall on report plant expansion has been iced

According to Reuters, Japan's Nikkei reported that financial issues had led the companies to reevaluate plans to expand the capacity of Tesla's Nevada Gigafactory by another 50 percent next year, providing no details of its sources.

Panasonic is the exclusive battery cell supplier for Tesla, which in turn is Panasonic's biggest EV battery client. The two companies have invested $4.5 billion in the plant, the Nikkei reported.

Shares of Tesla have had a volatile ride over the past year as Musk has overseen the ramp-up of the company's Model 3 sedan, the company's first vehicle directed at the middle market.

A cut-away of the magnetic coils found in the Tesla motor pack.

The companies plan to revisit their Gigafactory expansion plans in 2020 depending on Model 3 and Model Y sales at that time. Tesla's second plant, which will also "build cars" alongside its integrated automotive batteries, will suffer the same fate as Panasonic will cease investing. One would assume that any automaker buying Panasonic batteries would receive the same level of support. While production at the gigafactory in Nevada has improved and sales have climbed, the business has yet to become a major contributor to earnings.

Nikkei itself quotes a Tesla spokesman with the words: "We will, of course, continue to make new investments in Gigafactory 1, as needed".

Slowdowns in production of Tesla's Model 3 sedan, its most affordable electric vehicle, ate into Panasonic's profits and reflected a reality for mainstream EV producers-lower prices require higher volumes for profitability.

Having already splashed out $4.5bn on the factory, the two manufacturers had made a decision to freeze their spending plans, although Panasonic was looking into alternative Tesla projects in which to invest, Nikkei reported. Tesla has stated that 2019's goal is to produce 360,000 electric vehicles. While us and others could but wonder, Panasonic now took a stand that is ambivalent. Moreover, the article states that Panasonic intends to freeze its investments in Gigafactory 3 in Shanghai as well. In the March quarter, Tesla delivered 63,000 vehicles, down from 90,966 in the final three months of 2018.

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