Tesla and Panasonic freeze spending on $4.5bn GigafactoryAPRIL 11, 2019 - Tesla and Panasonic are freezing plans to expand the capacity of their Gigafactory 1, the world's largest EV battery plant, as concerns mount on Wall Street about sales at Elon Musk's car company dipping below estimates. The partners had planned to raise capacity 50% by next year, but with sales of electric vehicles performing below plans, the two companies concluded that a major investment at this stage poses too much of a risk. Tesla's goals of becoming a mass producer of electric vehicles, on the order of 1 million cars a year, will be pushed back for now.
The decision reflects the dilemma facing the EV industry. Bringing down production costs -- the key to attracting more buyers -- requires major investments in innovation. But that is difficult under the thin profits that EVs produce. Panasonic will also suspend its planned investment in Tesla's integrated automotive battery and EV plant in Shanghai.
The Gigafactory currently is said to have the capacity to supply more than 500,000 cars annually. The companies had intended to expand the capacity to the equivalent of 54 gigawatt-hours a year by 2020, up from 35 GWh at present. Tesla sold 245,240 vehicles in 2018. This year it plans to sell 360,000 to 400,000 cars, but deliveries have been delayed due to production bottlenecks. Since last summer, Tesla executives have stopped specifying a target date for reaching 1 million cars annually.
Panasonic's Tesla EV battery business had operating losses exceeding 20 billion yen in the financial year that ended in March, up from a year earlier. The losses were exacerbated by delays in the start of production of the Model 3. Tesla's unit sales fell about 30% in the January-to-March period versus the previous quarter, hurt by slower growth in China, smaller tax breaks for electric vehicles and problems with logistics. This has made the companies more cautious about the future.
Wall Street analysts have recently raised concerns about weakening demand for the Model 3. In an April 4 report, Goldman Sachs analysts said, "Volume expectations for the company's products in 2019 are too high, with consumer demand likely lower as subsidies phase out in the U.S."
Panasonic cuts Tesla risk to stem further bleedingPanasonic's decision to halt investment in an electric vehicle battery plant run jointly with Tesla marks a change in strategy for the company, which went all in on the project but now seeks to reduce its dependence on the automaker. Signs that the partners were falling out of step had emerged. Tesla's plans to build a factory for electric cars in Shanghai, complete with production lines for batteries, were met with caution at the Japanese company.
Meanwhile, Panasonic has taken steps to diversify its vehicle battery business. It has enlisted Toyota Motor for a joint venture to mass-produce lithium-ion and other batteries, using factories in China and Japan. But producing cylindrical batteries for Tesla and square ones for Toyota at the same time "poses a major risk," an industry source said -- a lesson that Panasonic learned with money-losing investments in display panels.
kublikhan wrote:APRIL 11, 2019 - Tesla and Panasonic are freezing plans to expand the capacity of their Gigafactory 1, the world's largest EV battery plant, as concerns mount on Wall Street about sales at Elon Musk's car company dipping below estimates.
KaiserJeep wrote:This is an opinion from a retired EE with over 3 decades experience.
Tesla vehicles are well designed, and the production line has performed well enough to produce the needed number of vehicles. The battery technology is impressive, the vehicle range is more than sufficient, and the Model 3 now comes at a low enough price not to be a barrier to widespread purchase.
Tesla Model 3 teardown underscores missed opportunitiesOne of the most surprising findings by a teardown analysis earlier this year by the consulting firm Munro & Associates—and the reason for Green Car Reports to check back regarding the firm's conclusions—was that the Model 3’s core body structure, which requires many individual weld points and rivets, didn’t appear to be designed for what the Tesla chief executive officer had described in October 2016 as an “alien dreadnought” of automation that would signal the factory was ready for mass production.
The complexity of the body is one point illustrating that. The Model 3’s rear wheel well, for instance, has nine pieces of sheet metal that are riveted, sealed, or welded together, according to Munro, while the Chevrolet Bolt EV has just one stamped piece. Dreadnought or not, the deeper point the teardown may end up making is the viability of the Model 3 in turning a profit. Munro has pointed to two reasons why Tesla is having such manufacturing hurdles. He summed it up to GCR: “One, they didn’t hire a good body design engineering team, and, two, they thought that robots were their savior, when in reality, robots have been disappointing dreamers since da Vinci…literally!”
After the 6,600-hour teardown, it became more apparent what was happening. Munro pointed out a technology edge forfeited to serious issues with quality and manufacturing consistency. According to Bloomberg, Munro’s chief executive officer, Sandy Munro, sent Tesla a list of 227 possible improvements, pro bono. Munro, a longtime manufacturing consultant, says that he went through a similar recalibration of expectations with American carmakers in the 1980s and '90s. “If Mr. Musk does what I suggested above (the robots and redesigning the body-in-white), his company will be rolling in cash in no time,” he told us. “It worked for GM.”
kublikhan wrote:Not sure I would agree that Tesla vehicles are well designed either.
KaiserJeep wrote: Tesla has produced and sold far more BEVs than all other manufacturers world-wide. That they have not succeeded yet is indeed because consumers are FDH.
KaiserJeep wrote:I truly believe all we need is an oil shock on the scale of the original oil embargo, and Tesla will make a killing.. Because YES, the designs are respectable.
Outcast_Searcher wrote:My money would be on the Tesla competition -- not Tesla.
asg70 wrote:Two big news stories from Tesla lately, first being renewed claims of an autonomous overlord future and the other being the S/X drivetrain refresh with extra range.
The Autonomy stuff apparently isn't swaying wall street like it did in the past. Actions speak louder than words.
Plantagenet wrote:Any progress on the EV (?) purchase to be discussed in a new thread complete with pics?
Plantagenet wrote:Congrats in advance on your purchase of a new car.
asg70 wrote:No warning that I will die of cancer due to EM radiation?
asg70 wrote:Anyway, back to Tesla news....
Tesla made a flurry of "look at the shiny shiny" announcements to distract from this:
https://www.forbes.com/sites/jjkinahan/ ... fc33aa282a
I firmly believe Musk needs to step aside as CEO at this point. If he doesn't bury Tesla he will at least need to do YET another capital raise after saying he wouldn't need to do so.
What I'm seeing is he could never have sold a $35K car at a profit but thought he could bluff people into thinking that was the game plan. With the federal tax credit now half of what it was, I can't see why people would spend $50k on a car with questionable quality.
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