Panasonic says Gigafactory battery output to increase for Tesla Model 3

UPDATED: 10/31/17 8:07 am ET — new story

Panasonic on Tuesday said output at the $5 billion battery Gigafactory it runs with Tesla could soon increase as the causes of bottlenecks that have hobbled production are now understood.

Panasonic Corp., the world’s largest automotive lithium ion battery manufacturer, makes battery cells to which Tesla adds electronics to make battery packs for its cars.

Tesla Inc. earlier this month blamed manufacturing bottlenecks for limiting quarterly production of its mass-market Model 3 sedan to 260 vehicles rather than its 1,500 goal.

Panasonic CEO Tsuga said at an earnings briefing that delays to the automation of the battery pack production line meant some stages had to be completed manually.

“This process [for battery packs] will be soon automated, and then the number of vehicles to be produced will rise sharply,” Tsuga said. He declined to comment to what extent Model 3 production would be behind its targeted schedule.

The comments came as Panasonic on Tuesday said automotive demand helped July-September operating profit rise 6 percent, beating analyst estimates. It maintained its 335 billion yen ($2.96 billion) forecast for the year ending March.

Analysts have said Panasonic’s massive Gigafactory bet makes the firm highly sensitive to Tesla’s strategy. On Tuesday, Tsuga acknowledged the bottlenecks could impact earnings, but said the contract with Tesla was designed to hedge various risks. He also said battery businesses with other clients are profitable.

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