Amid greatly reduced demand for its aging Model S and Model X vehicles, the deteriorating relationship between Tesla and Panasonic raises existential issues for the partnership and larger concern for Tesla's ability to defend itself against the threat of greatly increased production of fresh and more attractive versions of EVs from other manufacturers, particularly in the SUV segment currently dominating the market.
Five years after committing to invest billions of dollars in a shared battery factory in the Nevada desert, Panasonic has a strained relationship with the electric-car pioneer. The Gigafactory was supposed to boost profits, cement Panasonic’s future in automotive electronics and give Tesla easy access to the most important—and expensive—component of its vehicles.
Instead, the partnership has exposed a culture clash between the conservative, century-old Japanese conglomerate accustomed to consensus and the 16-year-old Silicon Valley upstart built around Mr. Musk’s vision for upending 100 years of automotive tradition.
Their shared business is causing headaches. The bosses of both companies are pointing fingers at each other over the handling of battery production. And Mr. Musk’s behavior has rattled Panasonic’s top brass, to the extent that some remain worried about tying their company’s fortunes too closely to Mr. Musk and his Silicon Valley car company.
Mr. Musk has pushed Panasonic to cut what it charges for the battery cells as Tesla builds another costly factory in China. Panasonic Chief Executive Kazuhiro Tsuga has resisted the pricing requests, and says he is hesitant to go into China with Tesla. Production has fallen behind schedule, and the race to catch up has thrown the Panasonic battery unit deeper into the red.
At this year’s annual meeting in June, shareholders criticized Panasonic for getting in over its head. Hurt by the Tesla problems, Panasonic has seen its stock fall nearly 50% since the start of last year.
Mr. Tsuga, 62 years old, a traditionally reserved Japanese executive, speaks less sanguinely about the partnership than he once had. Asked in September whether he has had regrets about investing in the Gigafactory, he told reporters, “Yes, of course.” At the time he made the decision, he said, “that was the only rational option to supply batteries to Tesla.”
The tension with Tesla thrusts the Panasonic CEO into the uncomfortable position of trying to make the huge investment with Tesla work while he faces a growing faction of executives unhappy with the Gigafactory. Other Panasonic executives say they have no future with Tesla.
The article exposes the years of demands placed on Panasonic by Musk's unrealistic and unmet production goals. Time and again, Panasonic spent millions of dollars and increased staff to meet the pie-in-the-sky projections made by Musk, only to find the money and efforts were wasted, as Tesla never came close to fulfilling its CEO's bluster (see the graphic in the linked article).
Panasonic Chief Executive Kazuhiro Tsuga, an early champion of the relationship between his firm and Tesla, is nearing retirement age, and he is increasingly seen as the lone supporter in the executive suite for continuing the marriage between the two companies.
Mounting cracks in Tesla's future include the intent of other manufacturers worldwide to commit more resources and factory capacity to production of EVs now rather than later, a worsening economy in China, and carefully hidden problems (note the obviously staged Potemkin village photo in The Drive article) with the new Shanghai factory, which will prevent any meaningful production until after the second quarter of 2020. The China market, seen as Tesla's salvation, may prove to be its Calvary.
The latter situation is of particular concern with analysts and holders of Tesla debt, as its $566 million tranche of Solar City Convertible Senior Notes is due November 1st. Most of Tesla's recent acquisition of $2.4 billion from a debt and equity deal in May has been consumed by the $704 million 1Q and $507 million 2Q losses, and retiring the Solar City debt will finish it off.
I assume that rather than examining the very real issues raised in the linked Wall Street Journal and The Drive articles and considering their significance, POA's Tesla defenders will dismiss the situation, and criticize me for posting deleterious information about the company, as has been the previous norm.
https://www.wsj.com/articles/tesla-...lash-threatens-their-relationship-11570550526
https://www.thedrive.com/tech/29929...-start-making-cars-in-earnest-listen-to-ms-li
