Panasonic Corp and Tesla Inc. are deferring plans to expand the electronic automaker’s Gigafactory 1 battery plant in Nevada.

Separately, Panasonic said it was watching the demand situation in the electronic vehicle market before making some more investments in expanding the capacity of the Nevada plant.

The two firms were replying to a report by Japan's Nikkei that said they had frozen preceding plans to increase the capacity of the plant, which supplies battery packs for Tesla vehicles.

"Both Tesla and Panasonic continue to invest substantial funds into Gigafactory," a Tesla spokesperson said.

"That said, we believe there is far more output to be gained from improving existing production equipment than was previously estimated."

Giving no details of its sources, the Nikkei financial issues had led the corporations to rethink plans to extend the capacity of Gigafactory 1 by another 50 percent next year.

A news agency said the firms had already together invested $4.5 billion in the facility and had been planning to expand the plant's capacity to the equal of 54 gigawatt hours (GWh) a year in 2020 from 35 GWh at current.

"Panasonic established a battery production capacity of 35 GWh in Tesla's Gigafactory 1 by the end of March 2019 in line with growing demand," Japan-based Panasonic said in an email.

"Watching the demand situation, Panasonic will study additional investments over 35 GWh in collaboration with Tesla."


Neither corporation had made public detailed future development plans for the site, while Panasonic said in July a year ago it would consider more investment in the Gigafactory if requested by the U.S. electronic automaker.

Panasonic is the exclusive battery cell supplier for Tesla, which in turn is Panasonic's largest EV battery consumer. In February, Tesla said it had agreed to purchase U.S. energy storage corporation Maxwell Technologies Inc., sending shares in Panasonic lower.

Tesla Chief Executive Officer Elon Musk also said in November the U.S. firm would manufacture all its battery modules and packs at its new Shanghai factory and planned to diversify its sources.

The Nikkei report said Panasonic would also postpone its planned investment in Tesla's new Shanghai plant and would instead provide technical support and a small number of batteries from the Gigafactory.

The Japanese firm has only said that it was revising various potentials with regards to the plant.

Lower-than-expected vehicle deliveries by Tesla in the first quarter spooked stock and bond investors prior this month, adding to U.S. stock’s worries about its future cash flow.

Tesla is anticipated to report first-quarter earnings on April 24.

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