Panasonic may upgrade Japan plant to make advanced Tesla batteries

Panasonic Corp may upgrade one of its battery plants in Japan to produce advanced-format battery cells for Tesla Inc if needed by the U.S. electric vehicle (EV) maker, a person familiar with the matter told Reuters on Thursday.

Panasonic, currently the exclusive battery cell supplier for Tesla, produces cells for the EV maker at their joint plant in the U.S. state of Nevada - the so-called Gigafactory - as well as at two plants in Japan.

The Japanese plants handle cylindrical lithium-ion "18650" cells, used to power Tesla's Model S and Model X vehicles, whereas the Nevada plant produces the newer, higher-energy density "2170" cells for the mass-market Model 3 sedan.

The Japanese production lines would only need minor changes to switch to 2170 cells from the 18650, said the person, who declined to be identified as the matter was private.

Japan's Nikkan Kogyo newspaper reported on Wednesday that the upgrade could take place in this financial year ending March 2020.

Panasonic in a statement said nothing has been decided.

The development comes after Tesla Chief Executive Elon Musk said Panasonic had been "a constraint on Model 3 output since July". Panasonic's Nevada output is 24 gigawatt-hours (GWh), Musk tweeted this month, as opposed to the planned 35 GWh capacity.

Panasonic said it had completed installation of its equipment for a Nevada capacity of 35 GWh by the end of March 2019, but that not all the installed equipment is in full operation.