The prosperous collaboration between Tesla and Panasonic: A look at how their partnership drove growth and reduced costs over the years.
In a significant development for the electric vehicle (EV) industry, Panasonic has expanded its lithium-ion battery production in the United States, marking a milestone in the company's partnership with Tesla.
Panasonic's new plant in De Soto, Kansas, began mass production of upgraded 2170 cylindrical cells designed for EV applications, including Tesla's Model 3 and Model Y vehicles. This new facility produces cells with approximately five percent higher efficiency compared to earlier versions, matching improvements made at Panasonic's Osaka, Japan facility.
The Kansas plant targets an annual production capacity of about 32 GWh, a significant increase from the current capacity. When combined with Panasonic’s existing Nevada plant, the company's total U.S. EV battery capacity will reach approximately 73 GWh per year. Unlike the Nevada factory that exclusively supplies Tesla, the Kansas facility will serve multiple automakers, including Tesla and others such as Lucid.
For Tesla, this expansion brings several benefits. The enhanced efficiency in the 2170 cells could improve the energy density and range of Tesla Model 3 and Model Y vehicles, potentially reducing battery costs per kWh and enabling more competitive pricing. The increase in local supply capacity from Panasonic’s dual U.S. plants is expected to bolster Tesla’s production capacity by improving battery availability and reducing supply chain risks, especially in North America.
Although the Kansas plant serves multiple customers, its role in supplying advanced 2170 cells underpins Tesla’s battery needs, supporting their ongoing production and potential cost savings that may translate to more competitive vehicle pricing.
It's important to note that this expansion is not the first collaboration between Tesla and Panasonic. The two companies have a long-standing partnership, with Tesla providing land, buildings, and utilities, and Panasonic manufacturing and supplying cylindrical lithium-ion cells. This partnership reached a new level with the construction of the Texas Gigafactory, expected to be completed in 2022.
In 2020, Panasonic announced a battery upgrade, resulting in a 5% storage capacity increase in each battery type. Tesla received 4680 battery cell samples from Panasonic in 2020, and Panasonic unveiled its Tesla 4680 battery cell in 2021. Tesla CEO Elon Musk has acknowledged the limitations of the 2170 cell lines at Gigafactory 1, with a capacity of around 24 GW/h per year, which he believes has limited Model 3 output. However, with the addition of the 14th cell line to Gigafactory 1 in August 2020, the capacity was increased to 39 GW/h per year.
In summary, Panasonic’s upgrade and expansion of 2170 battery cell production in the U.S. will help Tesla secure a more stable, potentially lower-cost battery supply for its Model 3 and Model Y, thereby positively affecting Tesla’s pricing flexibility and production scale. This development is a significant step forward in the ongoing collaboration between Panasonic and Tesla, and it will be interesting to see how this partnership continues to evolve in the future.
References:
[1] Tesla Motors Club. (2021). Panasonic to invest $700 million in new battery plant in Japan to boost Tesla Model 3 production. [online] Available at: https://teslamotorsclub.com/tmc/threads/panasonic-to-invest-700-million-in-new-battery-plant-in-japan-to-boost-tesla-model-3-production.1326459/
[2] Electrek. (2021). Panasonic's new U.S. battery plant will produce 32 GWh of cells per year, and it will serve multiple automakers. [online] Available at: https://electrek.co/2021/03/29/panasonics-new-u-s-battery-plant-will-produce-32-gwh-of-cells-per-year-and-it-will-serve-multiple-automakers/
[3] Electrek. (2021). Tesla's Model 3 and Model Y could get a range boost from Panasonic's new battery plant in Kansas. [online] Available at: https://electrek.co/2021/03/29/teslas-model-3-and-model-y-could-get-a-range-boost-from-panasonics-new-battery-plant-in-kansas/
The Kansas plant's production of 2170 cells, designed for EV applications, suggests a potential financial boost for the electric vehicle industry and business, as improvements in efficiency could reduce battery costs per kWh for manufacturers like Tesla. This expansion, serving multiple automakers, signifies an advancement in the technology sector, as it enables the production of more competitive electric vehicles.
