Is the honeymoon over for Tesla and Panasonic?

Tesla Batteries 18650 Li-ion Cells

The relationship between Tesla and Panasonic has been a rocky one from the start. When Gigafactory 1 was in the planning stages, the Japanese giant waffled about how much it planned to invest, causing TSLA stock to gyrate. Panasonic doesn’t seem to have prospered from the partnership – the conglomerate’s battery unit is reported to be losing money, and its stock price has been on a downward trend since mid-2018.

Now an article in the Wall Street Journal paints a picture of two companies at odds due to a clash of corporate cultures. The article’s opening sentence refers to Elon Musk’s burlesque of smoking a doobie during a video interview – this apparently shocked some executives in Japan, where smoking the plant is still considered a serious crime.

Mr. Musk has repeatedly pressured Panasonic to cut prices for its battery cells, but Panasonic CEO Kazuhiro Tsuga has held firm.

The Journal describes Mr. Tsuga as “a traditionally reserved Japanese executive,” and says he is one of the few execs left at Panasonic who champions the Tesla partnership. Tsuga told reporters in September that he has had regrets about investing in the Gigafactory, and told the WSJ he’s hesitant to join Tesla in its China expansion.

tesla-gigafactory-cell-production-2

Former Panasonic executive VP Yoshihiko Yamada joined Tsuga in pushing the Tesla relationship, winning over other skeptical execs – he has now retired. At Tesla, Kurt Kelty, a former Panasonic employee and fluent Japanese speaker, did his part to build the relationship, helping to navigate the conglomerate’s bureaucracy and sitting in on meetings between Musk and Panasonic execs – Kelty left Tesla in 2017.

However, Musk told the WSJ that the partners’ relationship is still strong, and shared a recent message from Mr. Tsuga that said, “It is not an easy business environment for both of us, but I strongly believe we have to strengthen our partnership even more.”

Oddly, the WSJ report makes no mention of the open secret that Tesla is working towards producing its own battery cells. The California carmaker has acquired two firms with expertise in battery production, and battery research partner Jeff Dahn recently described a new “million-mile” battery cell. If the Tesla/Panasonic partnership is under strain, this is surely at least one of the reasons.

For its part, Panasonic recently announced a partnership with Toyota to develop prismatic cells.

Sources: Wall Street Journal, Electrek

  • Vincent Wolf

    This relationship will end badly.

    • freedomev

      Not badly for Tesla, just runs the present contracts out.
      For Panasonic, unlikely to be good unless they change which is their problem, can’t change like many corporations.
      Not like Tesla can’t use the cells even after the new designs come out, from storage demand with 250% profit.

  • freedomev

    I said this 4 yrs ago having watched both companies since they started and in Tesla’s case, before it was started in the EVDL where JB, much of early Tesla personal, the small cell pack design came from.
    And Tesla really saved Panasonic as was near bankruptcy when they got the Tesla
    contracts.
    As for the cells Tesla has designed their own for at least 5 yrs now and Panasonic really just assembles what Tesla tells them to do.
    The question is why isn’t Panasonic building, selling their own cells, modules in far great numbers, especially storage where profit is 250% each sale.
    Yet Panasonic drags it’s feet as a corporation, just can’t change so likely will die. Though how a quality battery producer in this huge market dies, one has to work at it.

  • dogphlap dogphlap

    It has been speculated that Tesla has some major cell improvements it’s to implement beyond the one million mile battery paper. If that is true Tesla may well want to keep production of that totally in-house in which case Panasonic will be left building only the old cell lines and soon nothing.

  • Bob Green

    Musk is not a nice man. For all his good PR and his bad public-speech impediment (lol) he leaves a long trail of burned relationships in his wake. Elon is no angel and not a person you would want to partner with. There is an old saying I find very true “in every partnership there is a winner and a loser” Elon is definitely the winner in all his relationships leaving a long trail of losers behind him, Panasonic to be the next loser. I hope Panasonic is ready to get the shaft.