Tesla is making a huge Gigafactory, which is expected to become the biggest building on earth on completion. And everyone wants to be a part of it. Panasonic President Kazuhiro Tsuga said the company is planning an investment of $1.6 billion into Tesla’s advanced battery factory in a hope of cementing its position in future automotive electronics, says a report from The Wall Street Journal.
Tesla factory to help Panasonic’s battery dream
Tesla and Panasonic are jointly investing up to $5 billion in the Gigafactory. The full size of Panasonic’s investment in the factory was not known until now. The factory will take several years before it starts full operations, but this wait will come at a huge cost for Panasonic, which has struggled to make money from its lithium-ion business.
While speaking at CES this week, Tsuga said, “We are sort of waiting on the demand from Tesla.”
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The EV firm has huge vehicle growth projections, but overall demand for electric vehicles has been dampened due to low gasoline prices.
“If Tesla succeeds and the electric vehicle becomes mainstream, the world will be changed and we will have lots of opportunity to grow,” Tsuga said.
Panasonic making a shift
Panasonic is also getting tough competition from South Korean battery makers, which have contracts from automakers such as General Motors and Volkswagen for the supply of electric and hybrid vehicles, says The WSJ. Panasonic intends to become a major auto parts supplier, and battery investment is just one element of its goal.
Even though TVs and cameras dominated Panasonic’s trade show exhibit, the Japanese firm showcased advanced electronics for cars and the home. The market for traditional TVs is down, and to make up for the loss, Tsuga is relying on the proliferation of small screens in automobiles.
Tsuga said the car is changing into an electrical object and that the company has the required technologies, and therefore, it is making a shift to automotive. It is expected that over the next four years, Panasonic’s sales to automakers will nearly double to account for 15% of the company’s revenue for the fiscal year, contributing ¥1.3 trillion ($11 billion), and by the end of the decade, it is expected to grow to nearly 25% of revenue.