May 20, 2016 / 7:32 AM / in 2 years

Panasonic can speed up Tesla plant investment if needed

TOKYO (Reuters) - Japan’s Panasonic Corp is ready to bring forward its investment in a Tesla battery plant it is helping establish if this is required to meet demand for the electric car maker’s upcoming Model 3 sedan.

Visitors look at Panasonic Corp's luxury brand home appliances called J concept at CEATEC (Combined Exhibition of Advanced Technologies) JAPAN 2015 in Makuhari, Japan, October 6, 2015. REUTERS/Yuya Shino/File Photo

“We will do our best to move up the schedule if requested,” Yoshio Ito, head of Panasonic’s automotive and industrial systems (AIS) division, told reporters at a briefing on Friday.

Panasonic plans to contribute $1.6 billion to Tesla’s $5 billion “Gigafactory” in phases over the next few years. Production of the batteries is due to start later this year.

A faster ramp-up of the battery plant would be crucial as Tesla has said it would respond to brisk demand for the Model 3 by tooling up its factories to build 500,000 vehicles a year in 2018, two years earlier than planned.

Supplier executives and industry consultants have told Reuters that the acceleration in the plans to move up the launch of high-volume production of the Model 3 to 2018 would be difficult to achieve and potentially costly.

Ito declined to comment on whether Tesla’s target is achievable. “We just don’t want to be a bottleneck,” he said.

Asked about the risks of being heavily involved in Tesla’s plans, Ito said Panasonic “hopes to play a balancing act” of ensuring investment returns and fulfilling its responsibilities.

Panasonic’s partnership with Tesla is part of the Japanese company’s effort to withdraw from low-margin consumer electronics like smartphones to focus more on automotive components and other businesses targeting corporate clients.

Panasonic is aiming to nearly double its automotive business revenue to 2 trillion yen ($18.2 billion) over the next three years, representing roughly 20 percent of overall sales.

To expand in the auto industry, it bought 49 percent of Spanish parts maker Ficosa International SA [FICOS.UL] last year.

Ito said Panasonic expects 300 billion yen to 400 billion yen of the 2 trillion yen revenue target to come from companies that it would purchase over the next three years. He cited automotive “infotainment” systems and automated driving as fields of mergers and acquisitions.

“We are mulling acquisitions of companies with technologies that we do not possess,” he said. “There are some possible deals on the table,” he said.

Reporting by Makiko Yamazaki; Editing by Christopher Cushing and Alexander Smith

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