* Battery 'giga factory' for electric cars would be a first
* Plant due on-stream in 2017, key for next-generation Tesla
* Panasonic looking for other supplier partners for plant
* Tesla has said it would announce details on plant this
Feb 26 Panasonic Corp is considering
investing in a U.S. car battery plant planned by Tesla Motors
Inc, sources familiar with the plan said on Wednesday,
with total investment estimated by one source around 100 billion
yen ($979 million).
The facility, expected to go on-stream in 2017, is part of
Tesla's blueprint for a more affordable electric vehicle and
would be the first major, integrated U.S. facility producing
battery cells for electric cars.
Tesla shares hit an all-time high on Tuesday, after a
brokerage set a new target price suggesting a rise of almost 50
percent from Monday's close, while Panasonic's shares jumped 7
percent on Wednesday to a three-week high.
Last week, Tesla gave some initial hints about plans for a
lithium-ion battery plant, or "giga factory", that would likely
include Panasonic and other suppliers as partners. It said that
further details would be announced this week.
Tesla declined to comment on Tuesday. Panasonic, the car
maker's primary supplier of lithium-ion batteries, said it
wanted to expand its cooperation with Tesla but declined to
"We have a cooperative relationship with Tesla and are
looking at various ways of strengthening that relationship in
the future," the company said.
Sources close to the situation said Panasonic was
considering investing in the giga factory project with an eye to
expanding battery supplies to Tesla when its current supply
contract ends in 2017. One of the sources added that the project
would likely require a total of about 100 billion yen.
"Panasonic is looking at various types of cooperation,
including taking on some of the investment," the source said.
"But Tesla is a venture business, so there's a need to be
cautious in looking at the risks involved."
The 100 billion yen figure was first reported in the Nikkei
business daily, which also said Panasonic was inviting several
Japanese materials makers to join the project.
The Nikkei said the plant would produce small, lightweight
batteries for Tesla and may also supply Toyota Motor Corp
and other automakers.
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 an 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 closed up $30.35, or 14 percent, at $248.00 on
Panasonic shares rose nearly 7 percent on Wednesday morning
in Tokyo to a three-week high of 1,279 yen.
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.