Tesla always looks towards new and innovative ways to get ahead of other tech companies. Now, the Company is making its own battery cells. Previously, it had to depend on Panasonic for battery cells, after the two companies signed a deal in 2014.
If Tesla is successful in making these cells, it would be able to sell its high-performance cars at cheaper rates. The reason is that the battery cells and battery packs are the most costly parts of an electric vehicle. The Company won’t have to pay other partners too.
At Tesla’s shareholder meeting earlier in June, CEO Elon Musk admitted that the Company has had battery problems in the past. Lack of batteries also limited Tesla’s electric vehicle production capacity in the past. The manufacturing of these battery cells also aligns with Musk’s vision of making Tesla “vertically integrated”. It means developing and selling everything it can, even its software.
However, making these high-powered cells will pose a serious challenge for the Company. The Company just implemented cost-cutting steps, to continue producing high-quality electric vehicles.
Tesla employees do most of their research on these cells at the Company’s Road facility in Vermont, California. This is the plant where the Company manufactures Model S, Model X and Model 3. On the other hands, the batteries are made at Gigafactory in Nevada. Panasonic owns and operates this site.
The staff at Tesla’s battery team is now focusing on manufacturing advanced battery cells. A former employee also said that the Company is looking for ways to make these cells on a large scale. Tesla also opened jobs in the previous month for the engineers involved in the battery cell design and manufacturing.
If the Company’s efforts to make battery cells are successful, it still won’t end its contracts with Panasonic and other battery manufacturing companies. In fact, Tesla is planning to work with Panasonic to make cells, which will go in the initial Model 3 cars. The production could start by the end of 2019.
Tesla has widely discussed the aim to manufacture its own battery cells, within its own ranks. During the Company’s annual meeting, Musk invited Vice President of Technology Drew Baglino and Chief Technical Officer JB Straubel on the stage. They told people about the Company’s battery cell initiative.
Musk told investors to focus on two strategic matters. Firstly, how quickly the Company can produce its battery cells to reduce the costs. Secondly, how quickly the Company develops self-driving cars. However, Musk hesitated to share more things. He said that the Company would share more details in the future, like acquiring Maxwell Technologies, which completed in May 2019.
Straubel stated, “It’s obvious to us now that we need a solution for cell production.” Baglino, on the other hand, said, “We aren’t just sitting idly. We are making all the moves, keeping the Company’s best interest in mind. After working with our partners for years, I think we will develop a solution to cell production.”
After these comments by Tesla executives, there were many reports of rising tensions between the Company and Panasonic. Some reports also suggest that Panasonic is trying to cut ties with Tesla. In January, Panasonic had a deal with Toyota to manufacture battery cars together. In April, Panasonic said that it would freeze its investment in Tesla factories.
After a few days, Musk blamed Panasonic for slowing down the production pace of the Model 3. He said that the cell lines are currently operating with only “two-thirds of their capacity.” He also tweeted, stating clearly that the Company won’t spend more money on capacity.
Incorrect. Pana cell lines at Giga are only at ~24GWh/yr & have been a constraint on Model 3 output since July. No choice but to use other suppliers for Powerwall/Powerpack cells. Tesla won’t spend money on more capacity until existing lines get closer to 35GWh theoretical.
— Elon Musk (@elonmusk) April 13, 2019
Following the cost-cutting efforts of Tesla, Panasonic intentionally hired many of the Company’s employees at the Nevada site. These included technicians, system engineers, and supervisors. A former Tesla employee said that this move seems suspicious because it wasn’t as common two years ago. He also said that compensations and flexible work schedules have drawn the Tesla workers to Panasonic.
Related: Musk Not So Confident About One Million Teslas By 2020
