Panasonic to Become Lone Manufacturer in Tesla's U.S. Mega-Factory?

May 23, 2014 03:17 PM EDT | Matt Mercuro

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Panasonic Corp. said it expects to become the lone manufacturer in Tesla Motors' planned multibillion-dollar U.S. battery factory, according to Reuters.

Before this week, the Japanese company had only made cautious comments about Tesla's plans.

The Model S maker is seeking a total investment of approximately $3 billion in additional to the $2 billion it has pledged itself to contribute directly to the factory.

A timetable for a decision on Panasonic's investment has not been set, but any expenditure this year would be "small" according to Yoshio Ito, senior managing executive officer and president of the Japanese firm's automotive and industrial division.

"As we're not anticipating any sudden tenfold increases in demand or anything like that, we think it is right to break it up step-by-step and invest gradually," Ito said to reporters at a briefing in Osaka, according to Reuters.

Ito added that the two companies are discussing details of their investment in the new factory and will continue to talk about construction plans.

Panasonic, which is Tesla's prime supplier for lithium-ion cells but competes with Samsung SDI Co for auto batteries, doesn't expect another battery maker to put in a rival bid.

Ito does believe that there is a chance the company would not contribute most of the remaining investment even if it does become the sole manufacturer at the factory.

Tesla CEO Elon Musk told analysts a few weeks ago that expected Panasonic to become the main partner in the project from the get go, and believes the two companies to reach an agreement before the end of the year.

Panasonic signed a contract with Tesla in October to increase its supply to nearly 2 billion battery cells by 2017. Ito also said it would spend over 28 billion ($275 million) on auto batteries this year, twice its current budget. 

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