Tesla Urges Panasonic For 4680 Cell Development: New Plant In The US

There were rumors this week about Panasonic and its intention to establish a new battery production plant in the United States, in order to supply Tesla's demand for the new 4680 cells. Hirokazu Umeda, CFO of the Japanese company offered some arguments in favor of this decision, admitting that Tesla is basically pressuring them in order to accelerate the development and ramp up production of these cells.

Panasonic already has a cell plant on North American soil – Nevada - together with the Tesla factory in Fremont, which it manages in collaboration with the Austin manufacturer. The 2170 cells that Tesla implements in the Model 3 and Model Y batteries are manufactured there and, by the way, for which there is still great demand. The Japanese manufacturer confirmed the agreement for the production of 4680 cells from 2023 on at its plant in Wakayama prefecture, Japan.

According to company reports, this second factory would be installed in a location near the new Giga Factory in Austin, Texas, that as we all know was recently opened. For now, Panasonic has allocated a total investment of more than 700 million dollars with which to face the adaptation and reconstruction of the Wakayama facilities. It also announced the construction of two additional production lines next to those currently in existence for the production of 4680 cells. Once completely renovated, the factory will have an estimated annual production capacity of 10 GWh, enough to power 150,000 electric cars.

The size of the agreement between Panasonic and Tesla would offset the cost of building a new plant: a cost that can exceed billions given the tremendous complexity involved in a battery factory of this level. In exchange, transport costs would be eliminated, which would mean great savings for the firm.

Mr. Umeda did not provide details on these Panasonic facilities in the United States. “We cannot say more than what has been published, but we are receiving many requests. We are seeing continued strong demand from Tesla, for the 2170 batteries, but also for faster development of the 4680 cells."

Citing sources related to this issue, Bloomberg indicated that Panasonic will manufacture the 4680 cells in this new plant in the United States. According to this information, Oklahoma and Kansas have been doing their best in order to attract the attention of Panasonic, so that the company finally decides to put these facilities in their territory. Their respective administrations are keen to do so and offer attractive financial incentive packages, especially given the great number of jobs the battery plant would obviously create in both states.

A Panasonic plant in Oklahoma or Kansas would greatly benefit the Japanese conglomerate, giving it a potential key advantage over other Tesla suppliers such as CATL and LG. In either of the two states, the distance to the new plant in Austin, Texas is relatively short, which would ease the logistics of operations between the two facilities. The long and complicated process of moving battery cells and packs would be eliminated, improving the supply of components to the Austin facility, which already produces Tesla Model Ys with the expected 4680 cells.

Source: Bloomberg.

All images courtesy of Tesla Inc.

Nico Caballero is the VP of Finance of Cogency Power, specializing in solar energy. He also holds a Diploma in Electric Cars from Delft University of Technology in the Netherlands, and enjoys doing research about Tesla and EV batteries. He can be reached at @NicoTorqueNews on Twitter. Nico covers Tesla and electric vehicle latest happenings at Torque News.