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Panasonic could make batteries in China with Tesla

Panasonic factory, Dalian, China.

Panasonic’s chief executive has said that the company could make batteries in China alongside Tesla

Panasonic and Tesla could produce batteries in China together, according to Panasonic chief executive Kazuhiro Tsuga.

Panasonic and Tesla currently work together in Japan and in the US at Tesla’s Gigafactory 1, with Panasonic in charge of producing the cells that go in Tesla’s battery packs.

China recently announced plans to allow foreign companies to set up wholly-owned vehicle manufacturing subsidiaries in the country, bypassing previous regulations requiring foreigners to work alongside a Chinese partner. Together with its existing relationships with Tesla, this could be big news for Panasonic.

The company aims to double its automotive business revenue to 2.5 trillion yen (US$23 billion) as it moves away from consumer electronics, which are comparatively low margin.

Panasonic expects battery cell sales to increase its operating profit 11.7% to 425 billion yen (US$3.9 billion) in the year through March 2019.

However, some Panasonic executives are wary of committing to working too much with Tesla.

Un-named Panasonic executives told Nikkei Asian Review that any plans to enter China alongside Tesla ere “not solidified yet” and “nothing is set in stone”.

This comes amid delays to Tesla’s Model 3, which put pressure on profits from Panasonic’s automotive energy business for last year. However, with Tesla aiming to increase production of the Model 3 to 6,000 units per week by June, this may help assuage Panasonic’s concerns about its partners.

Expect Tesla’s performance in the coming months to be a litmus test for further cooperation between the two partners, especially in regards to making a move on the Chinese market.

Since the two already work together in the two already work together in the US Gigafactory, there are heavy expectations on what Tesla might do in China, the world’s biggest EV market.

Whilst there is nothing stopping Panasonic from building a production plant in China on its own, whether it would risk upsetting its partners, especially one as ambitious as Tesla, remains to be seen.

 

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