Musk Blames Panasonic for Battery Production Snag

CEO Elon Musk says Tesla Inc.’s output of Model 3 electric sedans is constrained by battery cell production inefficiencies on the part of partner Panasonic Corp., not a lack of actual installed capacity.

Musk’s assessment contradicts a Nikkei report late last week that indicated Panasonic was refusing to invest in further cell production capacity for Tesla until the carmaker’s output rises. The report said Panasonic had planned to invest $1 billion to hike the factory’s annual capacity to 54 gigawatt-hours from the current 35 GWh.

Musk says the latter figure describes “theoretical” capacity, adding that functioning capacity is closer to 24 GWh per year. He says the actual output has constrained Tesla’s ability to make Model 3s since last July.

According to Musk, it “was physically impossible to make more Model 3s in Q1 due to cell constraints,” thereby causing total deliveries in January-March to fall 31% to 63,000 deliveries.

Musk says Tesla has decided not to invest in more cell making capacity until the existing lines at the Gigafactory get closer to their designed 35 GWh of output. The Nikkei says Panasonic confirms that not all installed production equipment at the facility is operational.