The Panasonic Situation

Twiddler said:

This has already been posted in the [dead] short term TSLA price movements thread, but I felt it needed more exposure and discussion. What are everyone's thoughts on this? Could it be that this is why no formal partnership has been announced for the gigafactory, or just the latest FUD? Quite a critical issue for the future of Tesla and Gen III

http://www.streetinsider.com/Inside...igafactory;+Cites+Increased+Risk/9321588.html

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My feeling is that there is some hardball being played between Tesla and Panasonic on the terms of the Giga factory investment partnership. Tesla has many options to pick from and obviously would prefer Panasonic, while Panasonic has no other options but wants to reap the highest possible margins they can from being a partner (higher the margins they require the more cost gets passed down into the GEN III).
As a long term investor, I would welcome Tesla excluding Panasonic to do ths themselves and to become even more vertically integrated than they already are. As a short term investor I would be afraid if something didn't get worked out with Panasonic for this.

Twiddler said:

Thanks for the reply. I do agree that this is likely panasonic applying light pressure on TSLA wrt negotiations. Still, I would be a little pissed if I were Elon about some exec casting doubt on their partnership.

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I'm sure Panasonic is also shopping their capacity around to see if they could get other automakers to bite thus providing them with more leverage in TSLA discussions. At same time TSLA I'm sure is considering other players for same reasons. This is more important to TSLA than Panasonic so I'm sure TSLA already has plan B.

Pretty much normal negotiations at this level.

There are certainly a number of balls in the air in the gigafactory juggling act. The big key that protects Panasonic is that the battery technology is theirs. Tesla certainly doesn't own the patents on the battery they want to use for the Model E or the Model S and X. I'm sure other companies have something similar but it won't exactly be the same.

Tesla does own some patents on the specific cell used in the Tesla battery, though. Those patents enable them to make a less expensive cell. Panasonic can't make an EV cell at the price point they're making the current cells without the Tesla patents.

I think the way that Tesla has mooted the possibility of the Gigafactory is a bit unusual, and may be putting potential partners off a bit. Things like this don't usually get such public discussion until plans are much further advanced. Elon likes to get ahead of himself sometimes. I think it is normal for Panasonic to reassure its shareholders that they have not yet committed themselves to anything.

Martini said:

I think the way that Tesla has mooted the possibility of the Gigafactory is a bit unusual, and may be putting potential partners off a bit. Things like this don't usually get such public discussion until plans are much further advanced. Elon likes to get ahead of himself sometimes. I think it is normal for Panasonic to reassure its shareholders that they have not yet committed themselves to anything.

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Elon Musk is ahead of all of us. He has his own way of doing things. And I must say that I don't always understand it either, but afterwards (most of the time) it appears that he was right by doing it the way he chose to do it.

All hail Elon.

TFMethane said:

All hail Elon.

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"Elon has huge steel balls. He truly does": Justine Musk

Elon Musk Quotes

Any thoughts on max drop dead decision dates. Tesla can't keep this off forever. Wonder what internal requirements will forces something. Plus or minus a few months is not a big thing but this feels like it's gone on too long. Makes me wonder if GenII is behind design schedules.

Cal1 said:

Any thoughts on max drop dead decision dates. Tesla can't keep this off forever. Wonder what internal requirements will forces something. Plus or minus a few months is not a big thing but this feels like it's gone on too long. Makes me wonder if GenII is behind design schedules.

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I'd say about T - 2 years. Panasonic have had a cell plant up and running in 20 months. GF is manufacturing batteries, not cars, which means arranging supply of raw materials is probably the big challenge.

At this point Panasonic needs confidence in Tesla but also in their own ability to deliver the required improvement in the cell at the target cost.
Middle of 2015 Tesla should:
- be selling in all major global markets
- be producing Model X at full rate
- have covered many more routes with Superchargers
- be much more advanced with AutoPilot, at the minimum having a semi-firm date on AutoPilot 1.0 with ACC, BSD and LKA.
- be increasing development work on Model E
Panasonic should:
- Have completed much more of their restructuring
- Be seeing even higher profit from Tesla
- Have had more time to view the rest of the car market.
- Have more idea of their progress on the 2017/2018 cell
- Have more idea of Tesla's progress

I think by end Q2 2015 Panasonic and partners should be in a better position to decide and I don't expect any big moves until then. Model E Elon target end 2017, real target end 2018 and merry Christmas 2019 to me.

I wonder if Panasonic's concerns lead to the decision to break ground at not one but two Gigafactory sites:

Tesla Gigafactory Hunt Will Pick Two, Not One, Locations, Says Musk

It certain reduces the risk that a supplier has to ramp up deliveries.