Tesla partner Panasonic is building a new 4680 battery cell pilot production line at Giga Nevada

Panasonic’s Chief Financial Officer Hirokazu Umeda noted during a briefing on Thursday that the Japanese tech conglomerate is planning to produce Tesla’s 4680 battery cells. Umeda also stated that after Tesla’s Battery Day event last month, Panasonic started working on a prototype manufacturing line for the 4680 cells.

“We have considerable know-how for that battery. We started working on it immediately after Tesla’s Battery Day and are also preparing to set up a prototype production line in parallel,” Umeda said, as per a NASDAQ report.

The 4680 cells, which have 500% more capacity and 6X more power than the current batteries of the company, are crucial to the plans of Tesla for the coming years. On Battery Day, Tesla executives Elon Musk and Drew Baglino clarified that in the company’s drive to accelerate the advent of renewable energy, the 4680 cell, which should pave the way for terawatt-hour scale battery development, is critical.

The drive by Panasonic to produce 4680 cells for Tesla is a very bold move for the Japanese conglomerate, especially as the joint venture of the two companies at Gigafactory Nevada has encountered challenges over the years. The difficulties faced by Tesla and Panasonic were so remarkable that crucial rumors at one point indicated that the Japanese company might break ties with the American EV manufacturer.

Needless to say, these speculations did not come to pass, especially as Tesla’s electric car sales stabilized the EV maker and its battery partner’s profits. So far, Tesla has achieved five consecutive profitable quarters, and Panasonic, for its part, has posted an 11 percent rise in operating profit for the second quarter, beating analyst estimates.

The CFO further claimed in the recent briefing that Panasonic is also launching an additional production line at Giga Nevada in addition to the prototype 4680 production line. It is projected that this additional line would raise the total capacity of the plant by 10 percent to around 38-39 GWh per year by 2022. “We are targeting a profit margin of around 5% at our Tesla battery business within two to three years,” Umeda said.

Ultimately, the construction of a prototype 4680 cell production line by Panasonic for Tesla bodes well for the rollout of its next-generation batteries by the electric car manufacturer. The company has, after all, stressed that it needs partners such as Panasonic, LG Chem, and CATL to manufacture more batteries than ever before, despite Tesla ramping up its own battery cell manufacturing activities at its pilot site in Fremont. The prototype 4680 line from Panasonic appears to be a step in this direction.

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