An ironic aspect of financing (from personal loans to multi-billion dollar deals) is that you can get it as long as you don't need it.<p>Google or FB would have no problem at all spending a measly $4.5bn on a project that potentially has real impact on their primary business (search,ads), or even secondary one (android, etc.). Their only problem is finding a way to spend it.<p>This is because Google makes software, and software doesn't really require much capital. The only thing they could realistically spend that kind of money on is m&a.<p>So, because they don't need it, google has many times that sum sitting around and could probably raise many times that sum again.<p>Because the only thing they could spend it on is m&a. If they do, the money goes to pay founders/investors in the target company....and back to to the "available to invest" pile of money collectively accumulating in software giants' balance sheets, VC & PE funds and such.<p>What rarely happens is actual spending.<p>If Tesla or another manufacturing company gets ahold of $5bn, they will actually spend it on parts, machinery and such.<p>The current money market is so loopy. All it can do is move money around. It can't spend it. It's like a real estate market in dense places like NY, but worse. Lots of money flies around, but it goes between one pocket and another. Very little goes towards building buildings. An investment in the gigafactory would be more like investing in a new city. It actually results in buildings, but isn't going to be attractive to investors, because... because it isn't a zero sum game. Other people can build a building too. There's no reason for your building to be worth more than it cost you to build.
They have already spent $4.5B which are creating all of the batteries for the model 3.<p>They are pausing spending of an additional $100-150M until Tesla needs the additional capacity. They don't yet need it.<p>What a terrible title...
I'm not sure this is bad news for Tesla, I'd say it's mostly bad news for the rest of us.<p>Tesla has reached enough scale to be more or less sustainable (in the sense that they don't need to be posting losses anymore), and I'd imagine they can continue to grow, if more slowly, without the rapid expansion of battery production capacity that this story is about.<p>But the great aim behind the gigafactory (at least, how I read it) was to drive battery cost down very aggressively, that is, working on the supply-side economics. This would then make EVs (not just Teslas) accessible to more people sooner, without all the subsidies (which have been a demand-side hack that didn't even work very well). If this means a slower clean transition (and I think it does) that's a sad outcome.
Panasonic's issue seems to be:<p>> <i>Panasonic's Tesla EV battery business had operating losses exceeding 20 billion yen [~180m USD] in the financial year that ended in March, up from a year earlier. The losses were exacerbated by delays in the start of production of the Model 3.</i><p>It's not entirely clear to me from the article whether this loss stems from the operations itself, or from the reduction in demand for the model 3. Either way, it's bad news for Tesla.
From Electrek [1]: A Tesla spokesperson has reportedly commented on Nikkei’s report:<p>> “We will of course continue to make new investments in Gigafactory 1, as needed,”<p>Update: In a comment to Electrek, Tesla exapnded:<p>> “We will of course continue to make new investments in Gigafactory 1, as needed. However, we think there is far more output to be gained from improving existing production equipment than was previously estimated.”<p>[1] <a href="https://electrek.co/2019/04/11/tesla-panasonic-suspend-investments-gigafactory-expansion-report/" rel="nofollow">https://electrek.co/2019/04/11/tesla-panasonic-suspend-inves...</a>
The most interesting part of this story is that Panasonic has chosen to broadcast this decision in a national newspaper in way calculated to cause maximum embarrassment to Tesla, which still depends on investor perceptions of huge upcoming growth to support its stock valuation.<p>An odd thing happened last year when Pana's reported margins dropped while Tesla's went way <i>up</i> during their "miracle Q3." A common theory among Tesla shorts was that Pana had helped them make the quarter with a discount on batteries, to be paid back at some point in the future. Given the big drop in Q1 deliveries and demand standstill in the U.S. after the Model 3 order backlog was depleted, maybe Panasonic is worried they're not going to get paid back?
This makes sense with GF3 coming online so quickly. The original plans to keep expanding GF1 may not be needed if GF3 can do it better and more cheaply.
There is a lot of negative sentiment around Tesla lately. The Giga Factory was supposed to be Tesla's greatest asset, its largest advantage in the market, that enables exponential growth of production and sales. It looks like bears are coming for Tesla if they don't step up their game.
The technology is clearly the key piece of Tesla... and while that scales well, the platform is another story.<p>Imagine if Toyota bought Tesla. That may be the best outcome possible as the platform would suddenly be at scale.<p>The technology could be added to all Toyota cars ICE included (with their level of fit and finish) and the ‘electric only’ line would be supported while it ramped up and lowered cost.<p>This would solve a lot of Tesla’s problems and make the outcome far more likely to be positive. As it stands, I want a Tesla, but I am not going to buy one because
1) cost vs quality
2) likelihood of implosion
Could this have anything to do with the Tesla acquisition of Maxwell? Perhaps there is a different battery technology on the horizon that won't require the same infrastructure with Panasonic?
Because I took away the wrong message from the headline, and others might too:<p>> Tesla and Panasonic are freezing plans to expand the capacity of their Gigafactory 1, the world's largest EV battery plant, as concerns mount on Wall Street about weakening demand at Elon Musk's car company.<p>Freezing expansion, not production.
"We are seeing significant gains from upgrading existing lines to increase output, which allows Tesla and Panasonic to achieve the same output with less spent on new equipment purchases."
I know Elon loves cars (and rockets), but what about selling batteries for other things? BMW sells its batteries for electric vessels (boats). It would be great (for the world at large) if Tesla did the same.