Tesla and Panasonic are the two driving forces behind the massive battery Gigafactory being built in the Nevada desert. To facilitate this huge project, Panasonic has formed a new company to oversee its operations at the Gigafactory, and its initial $92 million investment is the first of many cash infusions.
The Gigafactory will go online in stages, rather than all at once, as Tesla anticipates fairly rapid growth in its EV sales, especially in the next two years. By 2020, Elon Musk anticipates the Gigafactory could build as many as 500,000 battery packs per year. Though, when it goes online in 2017, production will be less than half of that. Tesla will be in charge of the factory itself, but Panasonic will provide the necessary manufacturing equipment and lithium-ion battery components.
The Gigafactory will also be powered entirely by renewable energy, though Panasonic hasn’t mentioned any plans on that front. The new company is called the Panasonic Energy Corporation of America, and it will be based out of Sparks, Nevada, with an initial investment of $5 million (separate from the actual Gigafactory investment itself).
Together, the two companies hope to corner the EV battery market with their massive battery factory, and they’ve already signed a $7 billion battery deal to keep Tesla production going. However, companies such as LG Chem and even Apple iPhone manufacturer Foxconn also intend to get into this growing market. Analysts have said that thanks to China’s recent round of EV incentives, the battery market is primed to explode…but not for a few more years yet. This is why Panasonic plans a gradual investment, expanding the Gigafactory’s production capacity as the market grows.
But what will happen if Tesla is on target with the Tesla Model III? How quickly will demand for an affordable Tesla grow? Even the Model X, twice delayed for a year, has over 20,000 reservations, and they just keep rolling in at a faster and faster pace:
The biggest bottleneck to Tesla growth has been battery supply.