Tesla stock down as Panasonic reviews investment in Gigafactory

Tesla stock fell around 3.8% on Thursday after it announced that it was reviewing the expansion plans for the battery gigafactory with its joint-venture partner, Panasonic.

Having already splashed out $4.5bn on the factory, the two manufacturers had decided to freeze their spending plans, although Panasonic was looking into alternative Tesla projects in which to invest, Nikkei reported.

The investment in the plant outside Reno would continue, but it was judged that existing equipment may be able to produce far more output than previously estimated.

“We will of course continue to make new investments in Gigafactory 1, as needed,” a Tesla spokesperson said in a statement.

“However, we think there is far more output to be gained from improving existing production equipment than was previously estimated.”

But according to Nikkei, the true reason behind the decision taken by Tesla and Panasonic were the financial hurdles which a review of their plans to raise capacity at the gigafactory by about 50% by 2020 had revealed, Nikkei said.

Panasonic would also suspend planned investment in Tesla’s battery and electric vehicle plant in Shanghai.

“Panasonic established a battery production capacity of 35GWh in Tesla’s Gigafactory 1 by the end of March 2019 in line with growing demand,” Panasonic said.

“Watching the demand situation, Panasonic will study additional investments over 35GWh in collaboration with Tesla.”

The news came amid investor concern about reduced demand for the Model 3.

Chief Executive Officer Elon Musk last week reiterated a forecast for 360,000 to 400,000 vehicle deliveries in 2019.