Tesla Gigafactory 1 to see Panasonic’s new battery lines and new Grohmann machines in Q4

I have seen the expected increase from Panasonic before — but this is the first time someone has come out and said that Panasonic was the bottleneck on TM3 production.

Let me be clear here: Panasonic is, and has been, an excellent partner for Tesla; they had the vision to step up from the highly-conservative slow-growth and risk-averse mindset which seems to rule cell manufacturers worldwide.

But this really does highlight exactly how hidebound cell manufacturers can be; and it makes good business sense in the world of manufacturing commodity cells. Manufacturing cells for watches and flashlights and etc has razor thin margins; there is a huge supply, and spending billions on a new factory is a great way to pick up a debt that cannot be paid off in timelines much shorter than a century. In this environment, spending money to make a fancy new limited-application battery — like a BEV battery — is risky.

This is exactly the buyers-market that VW, Porsche, Audi, BMW, Mercedes, Jaguar, and all the rest are depending upon; cheap, freely available cells, and a way to bring the usual tactics to bear to squeeze profit margin from suppliers to the auto manufacturer. VAG (in the form of their Audi subsidiary) is paying US $114 / kWh for their cells, squeezing quite a bit lower prices from LG Chem than GM managed to do on the Bolt.

BUT: The BEV cell market is NOT a buyers-market; it is a sellers-market. There simply are not enough cells to go around, and prices will sky-rocket — and still the cell-makers are slow to expand. LG Chem is building new capacity (to reach 90 GWh per year by 2020) which has to be split up amongst all of the car brands (five? six? more?) that need them.

Tesla-Panasonic will be at 35 GWh / year, undivided, by the end of 2018 — and last I heard planned for 105 GWh (by 2022?) from the GF1 alone; GF3 (China — start production 2022) and GF4 (Europe) will add substantially to capacity. Their aggressive expansion plans, and the fact that Panasonic was a bottleneck even with contracts, a partnership, and inside information on the plans for growth, gives me confidence that Tesla-Panasonic has an unassailable lead for the next five years or so.

Let me be clear here: Panasonic is, and has been, an excellent partner for Tesla; they had the vision to step up from the highly-conservative slow-growth and risk-averse mindset which seems to rule cell manufacturers worldwide.
[…]BUT: The BEV cell market is NOT a buyers-market; it is a sellers-market. There simply are not enough cells to go around, and prices will sky-rocket — and still the cell-makers are slow to expand. LG Chem is building new capacity (to reach 90 GWh per year by 2020) which has to be split up amongst all of the car brands (five? six? more?) that need them.
[…][Tesla-Panasonic’s] aggressive expansion plans, and the fact that Panasonic was a bottleneck even with contracts, a partnership, and inside information on the plans for growth, gives me confidence that Tesla-Panasonic has an unassailable lead for the next five years or so.

I agree 100% with your analysis. Very well stated.

I’ve been thinking the same thing, and it is heartening to hear from Panasonic themselves that they were the primary bottleneck. (A very admirable trait, but one that is also not surprising given what I know about Japanese culture.) I’ve been a fan of Panasonic for quite a while due to their excellent consumer products, and this joint venture with Tesla has really resulted in a that already high esteem getting a massive boost.

Panasonic could really position themselves extremely well in this burgeoning market, because the success of Tesla’s BEVs has done exactly what Elon and Co. were hoping for: the public has seen the light and they are now clamoring for battery electric vehicles, and the world’s automakers are scrambling to meet the surging demand. And the key to any BEV is the B part.

I see it as yet another huge advantage for Tesla and Panasonic being so far ahead of the game.

I TOTALLY AGREE.
EV production has always been, in essence, a battery story and will remain so for the foreseeable future. For the next five years it will mainly determine EV manufacturer shares. Beyond that as the EV’s are cheaper to produce than ICE vehicles, it will simply determine how quickly EVs replace ICE vehicles.
In cell and module cost and in cell availability, Tesla seems to have the advantage. Redesign of the short range battery module to facilitate faster and cheaper automation (drawing on Grohmann Engineering expertise) and Panasonic cell production investments will enable Tesla to offer the SR Model 3 and make a profit.

Spot on.
I haven’t heard much about solid state batteries since the PBS NOVA program
Search for the Super Battery with David Pogue.
https://www.pbs.org/wgbh/nova/tech/super-battery.html
This could be a real game changer for the energy storage industry.

I have seen the expected increase from Panasonic before — but this is the first time someone has come out and said that Panasonic was the bottleneck on TM3 production.

Let me be clear here: Panasonic is, and has been, an excellent partner for Tesla; they had the vision to step up from the highly-conservative slow-growth and risk-averse mindset which seems to rule cell manufacturers worldwide.

But this really does highlight exactly how hidebound cell manufacturers can be; and it makes good business sense in the world of manufacturing commodity cells. Manufacturing cells for watches and flashlights and etc has razor thin margins; there is a huge supply, and spending billions on a new factory is a great way to pick up a debt that cannot be paid off in timelines much shorter than a century. In this environment, spending money to make a fancy new limited-application battery — like a BEV battery — is risky.

This is exactly the buyers-market that VW, Porsche, Audi, BMW, Mercedes, Jaguar, and all the rest are depending upon; cheap, freely available cells, and a way to bring the usual tactics to bear to squeeze profit margin from suppliers to the auto manufacturer. VAG (in the form of their Audi subsidiary) is paying US $114 / kWh for their cells, squeezing quite a bit lower prices from LG Chem than GM managed to do on the Bolt.

BUT: The BEV cell market is NOT a buyers-market; it is a sellers-market. There simply are not enough cells to go around, and prices will sky-rocket — and still the cell-makers are slow to expand. LG Chem is building new capacity (to reach 90 GWh per year by 2020) which has to be split up amongst all of the car brands (five? six? more?) that need them.

Tesla-Panasonic will be at 35 GWh / year, undivided, by the end of 2018 — and last I heard planned for 105 GWh (by 2022?) from the GF1 alone; GF3 (China — start production 2022) and GF4 (Europe) will add substantially to capacity. Their aggressive expansion plans, and the fact that Panasonic was a bottleneck even with contracts, a partnership, and inside information on the plans for growth, gives me confidence that Tesla-Panasonic has an unassailable lead for the next five years or so.

The only things I would add are that LG Chem’s output will be further divided into stationary storage and consumer electronics. And Tesla’s output is also shared with stationary power.

Tesla’s upcoming ramp this Q4 2018 is starting to look a lot more encouraging, as Gigafactory 1, the company’s battery and powertrain facility, is set to receive upgraded battery lines from Panasonic, as well as new machines from Grohmann Automation. With these upgrades in place, Tesla’s continued Model 3 push would likely be a lot smoother than the previous quarters.

It is no secret that the Model 3 production ramp has been difficult for Tesla. In an interview earlier this year, Elon Musk described the past twelve months as some of the most difficult and “painful” periods of his career. Despite being in “production hell” for the past year, though, Tesla has started hitting its stride with the manufacturing of the Model 3. This quarter alone, Tesla is aiming to produce 50,000-55,000 units of the electric car – a goal that even a longtime skeptic of the company believes is attainable at this point.

Inasmuch as Tesla would likely break its production records this Q3, the company is just around halfway done with its Model 3 ramp. Tesla expects to increase its output for the vehicle to 10,000 units per week sometime next year as it offers other trims like the $35,000 base Model 3, which will be fitted with a smaller battery pack. To accommodate this upcoming demand, Tesla’s Gigafactory 1 would need to be upgraded.

In a statement to Bloomberg, Tesla partner Panasonic Corp. has announced that it is poised to complete its planned upgrades to the facility’s battery cell production lines earlier than expected. Back in July, Panasonic announced that it would install three new battery cell production lines sometime at the “end of 2018,” but according to Yoshio Ito, head of Panasonic’s automotive business, the Japanese company is now aiming to complete the upgrades earlier than expected. Ito also noted that the bottleneck in Model 3 production had been the result of Panasonic’s challenges in meeting Tesla’s demand.

“The bottleneck for Model 3 production has been our batteries. They just want us to make as many as possible,” Ito said.

The completion of Panasonic’s upcoming upgrades to Gigafactory 1’s battery cell production lines comes amidst the arrival of new machines from Tesla Grohmann Automation, which are designed to boost the electric car maker’s production capabilities. Updates on the new Grohmann machines were related by analysts from Worm Capital who went on a tour of Gigafactory 1 back in August. According to the analysts, Tesla head of investor relations Martin Viecha noted that upgrades from Grohmann, which are set to be sent to Gigafactory 1 by the end of Q3 or the beginning of Q4, would help module production become three times faster and three times cheaper.

“Grohmann Engineering will help module production become three times faster, and three times cheaper, according to Viecha. Their new system will be sent to the Gigafactory by the end of Q3 or beginning of Q4. The Grohmann machine will be in Zones 1, 2, 3, and Tesla will be receiving three machines. The process was designed to alleviate the previous bottleneck in module production which delayed Model 3 production significantly. The machine is already built, and points to the advantage Tesla will have in building future Gigafactories. They have learned many painful lessons, but have a solid blueprint for porting the factory across the world.”

Tesla’s demand for battery cells is set to increase within the coming quarters. As the company sets its sights on more ambitious targets, upgrades to Tesla’s key facilities like Gigafactory 1 could be the determining factor on whether the electric car maker can smoothly ramp production or not. With Panasonic’s upgraded battery cell production lines and the new Grohmann machines, Tesla’s Q4 ramp could very well be the company’s most impressive yet.

Article: Tesla Gigafactory 1 to see Panasonic’s new battery lines and new Grohmann machines in Q4

Can’t wait to see it!