Feb 26 Panasonic Corp is inviting a
number of Japanese materials suppliers to join it in investing
in a U.S. car battery plant that it plans to build with Tesla
Motors Inc, with investment expected to reach more than
100 billion yen ($979 million), the Nikkei reported.
Tesla shares also hit an all-time high on Tuesday after one
brokerage firm set a new target price that suggested shares
would rise almost 50 percent from Monday's closing price.
The plant, expected to go on-stream in 2017, will bolster
Panasonic's supply of lithium-ion batteries to the U.S.
Last week, Tesla shed some light on its plans for building a
lithium-ion battery plant, or "giga factory," that will cut
battery costs and allow the company to launch a more affordable
electric car in 2017. However, it said at the time that further
details would be announced this week.
Tesla declined to comment on Tuesday. Panasonic, the
carmaker's primary supplier of lithium-ion batteries, could not
immediately be reached for comment.
The U.S. plant, which will handle everything from processing
raw materials to assembly, will produce small, lightweight
batteries for Tesla and may also supply Toyota Motor Corp
and other automakers, the Nikkei said.
Battery costs have been a major stumbling block to
widespread electric car adoption in the United States, according
to analysts. Tesla's giga factory will lower costs by shifting
material, cell, module and pack production to one spot.
In Tesla's earnings conference call last week, Chief
Executive Elon Musk said the electric car maker expects to build
the factory with more than one partner, but a "default
assumption" was that Panasonic, as a current battery cell
partner, "would continue to partner with us in the giga
"The factory is really there to support the volume of the
third generation car," Musk said on the call. "We want to have
the vehicle engineering and tooling come to fruition the same
time as the giga factory. It is already part of one strategy,
one combined effort."
Tesla posted better-than-expected fourth-quarter results and
said deliveries of its luxury Model S electric sedan would surge
more than 55 percent this year to more than 35,000 vehicles.
Shares in the Palo Alto, California-based company, which was
founded in 2003, surged as much as 19 percent on Tuesday,
hitting a new all-time high intraday trading price of $259.20 a
share after Morgan Stanley raised its target price for the stock
to $320 a share from $153.
Tesla shares were still up $30.50, or 14 percent, at $248.15
in afternoon trading on the Nasdaq.
Morgan Stanley analyst Adam Jonas said in his research note
that the potential for lower battery costs through higher sales
volume could nearly double Tesla's share of the global car
market to 0.9 percent by 2028. Tesla remains the firm's top pick
in the U.S. auto sector with an "overweight" rating.
"Tesla is an extremely ambitious company for whom flooding
the market with fun-to-drive EVs and giving competitors a
headache might not be the endgame," he said.
Stifel analyst James Albertine said the giga factory could
be far more than an auto opportunity, as Tesla could have an
even more significant opportunity to supply the energy storage
market. He expects the factory would take two to three years to
build and require a $5 billion to $6 billion capital infusion.
"While we remain negative on Tesla shares above $200 as an
automotive OEM (original equipment manufacturer), the energy
storage opportunity requires a broader perspective and could
very well justify current, if not higher valuation levels," he
said in a research note.