A published report by the Nikkei Asia Review, without citing sources, indicates that Tesla Motors, and its battery technology provider Panasonic are suspending plans to expand the capacity of the U.S. based Gigafactory battery production facility. Tesla Battery Gigafactory

Original plans called for expanding the battery production facility’s capacity by 50 percent by 2020, however, financial problems reportedly have forced a re-think of that strategy,. Tesla indicated to Nikkei that far more output could be gained from improvement of existing production equipment at the battery facility.

The report further indicates that Panasonic intends to also suspend a planned investment in Tesla’s proposed battery production facility in Shanghai. According to the report, while Gigafactory production has improved, the business has yet to become a significant contributor to Panasonic earnings.

There were reports in March citing regulatory filings that indicated that Tesla had secured upwards of $520 million in loans from a syndication of Chinese banks to construct a vehicle and battery production facility in the country.

This news comes after a disappointing Q1 production performance and added speculation that existing Model 3 customer demand pipeline may not be as robust as once anticipated.

If this report holds true, it would represent another setback for the electric automaker’s plans to scale-up future production volumes over the coming years. Tesla would either have to invest its own funds or partner with another battery technology supplier.


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