Tesla Motors Inc. (NASDAQ:TSLA) to Open Up A Gigafactory in U.S., Panasonic to Finance

Panasonic Corp. (6752.T) recently announced that it will finance the battery plant of Tesla Motors Inc (NASDAQ:TSLA), which Tesla plans to open up in the region of United States. According to the news, Panasonic Corp. (6752.T) will be investing around $5 billion in the battery plant of Tesla Motors Inc. (NASDAQ:TSLA). A number of market investment firms are of the view that this new battery plant will not be restricted to charging electric cars only. The sources believe that Tesla will introduce innovative features in the new plant and expand its operations.

It is important to note here that Panasonic Corp. (NASDAQ:TSLA) is one of the biggest battery suppliers for Tesla cars. The chief financial officer of Panasonic announced that the company will invest unstipulated amount in the lithium ion batteries of Tesla. He further said that the investment will vary according to the demand of the batteries. This announcement by the CFO of Panasonic shows how much the company values its buyers, especially at a time when the market is facing strong competition from a number of Korean companies.

Sources have it that the lithium battery plant will cost around $5 billion. Panasonic Corp. (6752.T) is expected to invest around $200 – $300 million initially, although the investment is expected to go up to $1 billion.

Panasonic was previously planning on enlarging its operational sphere and increasing the production of batteries for a Japanese factory. It also planned to open up a new power station in the country of Japan. However, both the companies agreed on a new plan whereby Tesla Motors Inc. (NASDAQ:TSLA) will open up and manage a Gigafactory on the land of United States. As for Panasonic, its job will be to invest in the equipment and produce batteries for the Gigafactory. According to the latest estimates, the factory, which will be located near Reno, will be ready and operational by the end of 2020.

Analyst firms of the market gave a mixed response to the Panasonic-Tesla agreement. Standard & Poor’s 500 Capital IQ’s analyst, Efraim Levy, said that Tesla Stock remained quite volatile in the past and hence it was difficult to predict anything. He further commented that the company needed to increase its capacity together with a growth in its shipments.

Adam Jonas, an analyst at Morgan Stanley, in a research report released on August 1, commented on the second quarter’s earnings of the company. He further said that the company has outperformed in the recent quarter, so the chances are that it will deliver as many as 100,000 vehicles by the end of next year.

Quartz, a website known for reporting business news, said that the new factory is expected to power other electronics as well, from consumer devices to drones. It further stated that Tesla’s affordable power stations will be much in demand in near future since the consumers are turning away from costly electric utilities. The website further reported that Tesla’s Gigafactory is expected to produce 10 gigawatt hours of energy each year. Such amount of energy can power a house for almost 1,000 years. Hence, chances are that Tesla Motors Inc.’s (NASDAQ:TSLA) batteries will gain a larger market share in the future, instead of its cars.