(Benzinga) – Panasonic Corporation PCRFY 0.51%, a leading Tesla Inc. TSLA 1.86% battery supplier, is not worried about the electric vehicle maker purchasing batteries from rivals or start in-house manufacturing of battery cells, the Financial Times reports.
What Happened: Tesla, during its battery day event, disclosed that the company is set to face battery shortages by 2022 — with the lack of capacity with battery suppliers hampering its ambitious expansion plans.
There were speculations of Tesla’s initiatives for in-house manufacturing of battery cells to attain self-sufficiency hurting its suppliers. Still, the company made clear that it does not intend to phase out battery cell purchases from suppliers like Panasonic, LG Chem, or CATL.
Panasonic’s last quarter earnings report showed that the company’s revenue from automotive batteries boosted significantly after expanding production in North America, Bloomberg noted.
Panasonic played down fears of Tesla’s move to produce its batteries. The company is betting that Tesla will continue to rely on Panasonic’s technology and patent war chest to achieve the ambitious plans of making more affordable batteries, as per FT.
Panasonic’s EV battery business head for the U.S., Yasuaki Takamoto, said that the company knew from the beginning that its partnership with Tesla that Panasonic alone couldn’t fulfill the Elon Musk-led company’s ambitious expansion plans.
Why It Matters: Takamoto expects Panasonic’s EV battery business to expand even if Tesla produces its batteries or purchased more from rivals, since the total volumes of electric vehicles in the market would increase.
Musk wants to increase the production of batteries to 3 terawatt-hours a year in a decade using the bigger 4680 format, which is 80 times bigger than Tesla and Panasonic’s growth plans by 2022.
However, Panasonic has already started working on the 4680 format, which would be cheaper due to the higher concentration of nickel and the elimination of cobalt, the most expensive battery component.
Price Action: Panasonic shares closed 0.5% higher at $9.76 in the otc market on Friday.