New Tesla Panasonic Deal Means More Batteries and Nevada Expansion

Tesla has reached a new three-year deal with Panasonic for battery supply from Gigafactory Nevada. The agreement was signed on June 10, according to a Securities and Exchange Commission filing, Tesla made Tuesday.

“On June 10, 2020, Tesla, Inc. and Tesla Motors Netherlands B.V. (collectively, “Tesla”) and Panasonic Corporation and Panasonic Corporation of North America (collectively, “Panasonic”) entered into an amendment and restatement (the “2020 GTC”), of the General Terms and Conditions entered into between Tesla and Panasonic on October 1, 2014, as amended, which governs certain agreements for Panasonic to manufacture lithium-ion battery cells for Tesla at Gigafactory Nevada. The 2020 GTC, among other things, modifies the term to expire 10 years after Panasonic achieves certain manufacturing milestones.”

The timing of this Tesla Panasonic battery announcement is fascinating and exactly lines up with the lowering price of the Model 3, S, and X. I can assume the new contract means cheaper batteries and higher volume. Even just a 10 to 15% drop in battery price will account for the car price drop.

Also, this explains the Semi announcement, now that they have more batteries.

And this is the clearly their blueprint, max out all the batteries they can buy from CATL and Panasonic in the next 3 years, while scaling up Tesla’s own battery production, as all these new Gigafactory is building out. That’s very smart. What is unclear is what will happen after 3 years.

Also, this can explain the lowering of Tesla prices, especially the $5,000 drop-in pricing of the 402-mile Model S that was announced two days ago.
A user named Gregory Warrington writes on Electrek’s discussing saying “I think it is important to remember just how many batteries Tesla will need to ramp up all of its products. I can see it focusing its own battery supply/tech on its vehicles where the demands for battery performance and innovation are very important and then using all of these partnerships to help meet the demand for all of its other products. The way Tesla likes to always innovate means it is difficult to get into these long contracts with suppliers. If they control their battery supply for their vehicles they can innovate and change at their own pace. All of the grid storage products don't require the same type of innovation to stay competitive and they can rely on partners to supply the batteries.”

Now, let’s think about what may be happening at Tesla Battery Day.
So CATL is making million-mile batteries for Tesla in China and Panasonic continues in Nevada. After this, a Tesla battery breakthrough to be revealed at battery day seems less likely or at least, less like a step change. I was hoping Tesla would announce a big leap in cost efficiency and density of its new batteries during the Battery Day.

I don’t know how great are the most proclaimed battery advances, but while Battery Day will be interesting, it apparently won't be revolutionary except maybe to do with the electrodes. I am sure battery chemistry is slowly advancing but the big innovation will probably be elsewhere.

Things that seem to be happening are stuff like cobalt-free batteries that are less energy-dense, but last longer and are less likely to catch fire. This could be the million-mile battery that allows the vehicle to grid.

To conclude, I have a question. Tesla has a contract with LG Chem, a 2-year contract with CATL, a 3-year battery contract with Panasonic. So the batteries produced in Tesla is yet another late project? Is Tesla delaying its own in-house battery project or just covering its bases while working on its own in-house advanced batteries? What do you think?

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This is Armen Hareyan from Torque News. Please visit us at https://www.TorqueNews.com and follow us on Twitter at https://twitter.com/torquenewsauto for daily EV, Tesla and automotive news analysis.

Reference
Electrek https://electrek.co/2020/06/17/tesla-new-deal-panasonic-battery-supply/

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