Why is there a current battery supply problem?

[vin5xxx]

Panosonic and Tesla have been partners for several years. Obviously they planned for production levels in the current range. Certainly they would have had contingencies to increase/decrease production rather quickly as needed. So why are they stuck at 550 battery packs/week? I know they are re-opening past lines that were shut down but I am very disappointed in the current production levels and I am shocked that the reason is cell availability. Both Panasonic and Tesla should have had a plan to increase production at a far higher rate.

 

[pGo]

Agreed. That bugged me too. Elon has been talking about production issues for more than 6 months now. And still no immediate resolution yet. Execution and leadership at stake.

 

[SteveH]

My WAG has been that Panasonic was unwilling to sign the agreement until now because they were concerned about Tesla's long term viability and didn't want to invest a ton in new manufacturing for lion batteries if there wasn't going to be a long term market for that kind of volume.

 

[XrstalLens]

Don't forget how big of an impact Tesla is having on global Li-Ion cell production. At current production rates, Tesla is consuming approximately 3.5 million cells per week, or 200 million a year, which is approximately 30% of global production capacity (see http://www.greencarreports.com/news...ne-double-global-demand-for-its-battery-cells). If I were Panasonic, I'd want to be darn sure Tesla is going to stick around long term before building new plants and reactivating mothballed plants at that kind of scale. So, I can't say I blame them.

 

[brianman]

Don't forget how big of an impact Tesla is having on global Li-Ion cell production. At current production rates, Tesla is consuming approximately 3.5 million cells per week, or 200 million a year, which is approximately 30% of global production capacity (see http://www.greencarreports.com/news...ne-double-global-demand-for-its-battery-cells). If I were Panasonic, I'd want to be darn sure Tesla is going to stick around long term before building new plants and reactivating mothballed plants at that kind of scale. So, I can't say I blame them.

If I were Panasonic and I heard these whispers about Tesla being battery constrained, I'd get off my duff and sign a contract extension ASAP before they go shopping elsewhere. Oh wait, they just did that...

Just sayin'.

 

[XrstalLens]

If I were Panasonic and I heard these whispers about Tesla being battery constrained, I'd get off my duff and sign a contract extension ASAP before they go shopping elsewhere. Oh wait, they just did that...

Just sayin'.

I'm with you. I think Tesla has gotten to the point where they can pretty well show they'll be around long enough to make the investment, and Panasonic appears to concur.

 

[Ziggy]

Oil companies buying up batteries to cause a supply constraint..... hehe

 

[ItsNotAboutTheMoney]

Based on previous publicly available estimates of projected construction costs, it's a bit over $4.nn per (cell per year) for manufacturing capacity. If Tesla wants 1.8 beeeellion cells over 5 years, then an extra 210M cells per year would require over $840M in investment, and that's assuming fixed demand from the get-go. Also add that this capacity will be for Tesla. Given the significant capital investment required, if Tesla wants a low price per cell Panasonic needs to be very confident that Tesla can survive to complete the contract. Both sides are hoping this will be a long-term synergistic partnership, so I'm not surprised there was careful negotiation.