Panasonic Corp., the exclusive supplier of Tesla Motors’ Model 3 lithium ion batteries, said today it would raise up to 400 billion yen ($3.86 billion) in corporate bonds primarily to invest in Tesla’s gigafactory, Reuters reported. The investment is more than double the $1.6 billion Panasonic said it would contribute to the $5 billion lithium ion battery factory in May. In 2014, the supplier signed onto the construction project with Tesla as the principal partner, both agreeing the “target” of the gigafactory is to reduce the cost of long-range battery packs and manufacture at a mass-market level for the electric vehicle, a Panasonic spokesman said. With 373,000 advance deposits in hand for the upcoming Model 3 sedan, Tesla has moved to speed up construction of the gigafactory, saying it would build 500,000 vehicles in 2018 -- two years earlier than scheduled. That demand and Panasonic’s decision to have a greater presence in the automotive industry pushed the supplier to make the additional investment. “Panasonic Corporation looks at the automotive sector as a high-potential growth area, among others, and for that reason is prioritizing investment in this area,” the spokesman wrote in an email to Automotive News. Also today, Panasonic posted a 13 percent decrease in its operating profit to about $646 million in its fiscal first quarter. It also reported a 5.9 percent drop in total revenue to $17.1 billion. In its report, Panasonic partly attributed the loss to increased investments, like those in the automotive industry, for growth in the long run. Panasonic is headquartered in Osaka, Japan. Its automotive arm, Panasonic Automotive Systems Co., ranks No. 23 on Automotive News’ list of the 100 largest global suppliers with estimated total revenue from auto parts sales of $9.99 billion in its 2015 fiscal year.
Panasonic plans to raise up to $3.9bn in corporate bonds, partly because it needs to speed up investment in Tesla’s battery plant, the Gigafactory in Nevada. As a Tesla battery supplier, the move is Panasonic’s answer to helping Tesla respond to the demand for the forthcoming Model 3 electric vehicle, which has around 373,000 advance orders, as well as its plans to build 500,000 vehicles in 2018, which will require a significant increase in battery cells.