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Tesla Motors Inc (TSLA) Model 3 To Help Panasonic Double Battery Sales To $4 Billion

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Panasonic plans to double its automotive battery sales to $4 billion by March 2019, which would be the first full production year for Tesla Model 3

Tesla Motors Inc (NASDAQ:TSLA) has planned to offer its first mass-market offering, the Model 3, for $35,000 by substantially bringing down its battery costs via large-scale production at the Gigafactory, along with its battery partner, Panasonic Corporation. While the automaker owns and operates the gigantic battery plant, the battery-maker is responsible for producing battery cells at the factory.

After seeing high level of Model 3 reservations, the Japanese company expects to double its battery sales over to $4 billion for the next three years, which would be the first full production year for the Model 3, Reuters reported.

Panasonic VP of Automotive & Industrial Systems Company, Kenji Tamura, said that the annual car battery sales will likely expand to JPY 400 million ($3.97 billion) by March 2019, up from JPY 180 billion by the year ended March 2016. Last month, Tesla CEO Elon Musk revealed that Panasonic would remain exclusive battery cell supplier for the Model 3, as well as the Model S/X, under their existing agreement at the Gigafactory.

The electronic behemoth seems to spend as much as $1.6 billion at the Gigafactory, about one-third of the total estimated cost of the plant. It will largely invest in equipment for battery cell production. The first manufacturing line worth $51 million will likely be completely by the end of this month, according to a building permit at Buildzoom.

Mr. Musk recently called Panasonic’s production equipment at the Gigafactory “impressive machines” and expected the production rate of battery cells to be fast. The Japanese battery-maker plans to start production ahead of schedule at the factory by November 2016, after it held a big hiring event last month for advanced manufacturing positions.

The Gigafactory is expected to operate at full capacity by 2020, when it will be fully constructed. Tesla’s compact sedan will have a new taller and bigger cell format, which could also be used in Model X and Model S to streamline production. The company already produces battery packs at the plant for Tesla Energy products: the Powerwall and Powerpack.

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