Tesla, Panasonic freeze expansion, Nikkei says

By BLOOMBERG

TOKYO • Tesla Inc and Panasonic Corp are suspending plans to expand the capacity of their US$4.5 billion (RM18.5 billion) US plant in the face of uncertain demand for electric vehicles, the Nikkei reported yesterday.

The pair had intended to raise capacity 50% by 2020 to the equivalent of 54GWh, but financial problems forced a re-think, the Nikkei said without citing its sources. Panasonic also intends to suspend planned investment in Tesla’s battery and EV plant in Shanghai, and instead provide technical support and a small number of batteries from the existing Gigafactory, the newspaper reported.

Tesla shares fell as much as 4.7% to US$263.20 in pre-market US trading yesterday.

Through Wednesday, the shares had declined 17% this year amid signs of softening US demand for its Model 3. The Nikkei report emerged after Tokyo trading closed.

A record decline in Tesla deliveries during the March quarter is stoking concerns about slackening demand for the Model 3 sedan it started selling less than two years ago. While co-founder Elon Musk reiterated a forecast for 360,000 to 400,000 vehicle deliveries in 2019, investors remain cautious given its history of missing ambitious projections.

A Tesla spokesman wasn’t immediately able to comment on the decision to freeze spending.

“Panasonic will study additional investments over 35GWh in collaboration with Tesla,” the Japanese company said in response to the report. — Bloomberg