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Panasonic says it will initially offer its lithium-ion batteries to Tesla. However, it also intends supply other companies.
Panasonic Corp (TYO: 6752) will soon start mass-producing a new battery line for Tesla (NASDAQ: TSLA). According to a recent statement, the Japanese consumer electronics giant will begin manufacturing its new lithium-ion batteries at a plant in Japan before the end of March 2024.
Initially unveiled in October last year, Panasonic’s battery line takes the 4680 format – 46 millimeters wide and 80 millimeters tall. This size is nearly five times bigger than the current supply crop Tesla receives. Generally, the new deal will allow the electric vehicle manufacturer to save money on production in the long run.
In addition, Tesla CEO Elon Musk also explained that the new battery cells are six times more powerful, and reduce cost per kWh by 14 percent. Using these batteries will allow Tesla owners to enjoy an improved vehicle range. With a better range, Tesla would be able to attract more customers to the EV space.
Panasonic did specify how much it would spend to expand production lines at its Wakayama factory in western Japan. However, the Nikkei newspaper had earlier reported that the Japanese multinational conglomerate company planned to invest 80 billion yen ($692 million) in the plant.
Musk also expressed a desire to see Tesla begin to produce the 4680 battery cells in-house as well, starting from 2022. He further added that the first EVs equipped with these cells would ship the same year.
Panasonic Does Not Rule Out Supplying the Same Tesla Battery Line to Other Companies in The Future
Although Panasonic intends to initially produce batteries primarily for Tesla, it could also begin supplying to other companies down. Kazuo Tadanobu, chief executive officer of Panasonic’s newly-consolidated in-house battery division, was clear on this. In a November 2021 media session, Tadanobu said:
“As a principle, Tesla, our close partner, is our main priority. But we won’t rule out the possibility of branching out to other companies that share our values if we can do so without overextending our resources. We are considering various possibilities in terms of how we work with automakers.”
In addition, Tadanobu also explained that the battery efforts would focus on eco-cars and telecommunications infrastructure. Furthermore, the CEO ruled out the production of iron phosphate batteries for the time being. As he put it:
“Our cylindrical batteries [for such customers as Tesla] make it easy to balance safety and high capacity. We also want to contribute to electrifying such vehicles as trucks, which have difficulty running long distances on [cheaper] iron phosphate batteries. We’re not considering making iron phosphate batteries at this time.”
Touching on telecoms infrastructure, Tadanobu explained that Panasonic wants to leverage the expertise it currently enjoys from building energy storage systems. So far, Panasonic has built these systems for homes and also for medical practice.
He concluded by saying that nickel-metal hydride and lithium-ion batteries are currently experiencing more usage in medical equipment.