Panasonic is investing $1.6 billion in Tesla’s massive gigafactory

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Panasonic is already a major player in the automotive electronics market, but it wants to make sure that the transition to electric vehicles won’t threaten its position. That’s why the Japanese company plans to invest as much as $1.6 billion into the massive battery factory that Tesla is building in Nevada at the moment, which is expected to cost around $5 billion by the time it’s completed. The company has expressed its belief that electric vehicles could be a major source of growth in the future, and it’s believed that Panasonic’s automotive business could account for 25% of its revenue by 2020.

Panasonic Corp. President Kazuhiro Tsuga said the company will spend up to $1.6 billion on an advanced battery factory with electric-car maker Tesla Motors Inc., an investment it hopes to cement its future in automotive electronics. The Japanese consumer electronics giant and Tesla are jointly funding an up to $5 billion battery plant in Nevada. Panasonic hasn’t previously disclosed the full size of its investment. It will be several years before that factory is humming at full steam, and for Panasonic the wait will be costly because its lithium-ion battery business has struggled to make money. “We are sort of waiting on the demand from Tesla,” Mr. Tsuga said in an interview at the Consumer Electronics Show this week. Tesla’s vehicle growth projections are huge, but low gasoline prices have damped overall demand for electric vehicles. “If Tesla succeeds and the electric vehicle becomes mainstream, the world will be changed and we will have lots of opportunity to grow,” Mr. Tsuga said. Panasonic also faces rising competition from South Korean battery makers that have contracts to supply electric and hybrid vehicles coming from General Motors Co. and Volkswagen AG.

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