Investor's Corner
Tesla battery partner Panasonic sees higher Gigafactory output, cites Model S/X demand increase
Panasonic President Kazuhiro Tsuga recently discussed some details about the Japanese corporation’s existing operations with American electric car maker Tesla. According to the executive, Panasonic expects to see higher yields from Gigafactory 1 as operations get optimized, and there could be a potential upside in Model S and X demand as Tesla takes actions to make its flagship vehicles more attractive to consumers.
Tsuga’s comments about Tesla were a response to an inquiry during a Q&A session following Panasonic’s release of its fiscal 2019 financial results. Tsuga pretty much confirmed what Elon Musk mentioned on Twitter last month, stating that Gigafactory 1 is currently operating at about 24 GWh despite the facility having a theoretical capacity of 35 GWh. “For Tesla, 35 GWh initial investment has been completed already, and utilization as per Elon is maybe 24 GWh currently. This year, we want to increase this (utilization) rather significantly,” he said.
Explaining further, Tsuga noted that efficiencies in Gigafactory 1 should improve in the near future, particularly as its higher-speed production lines get optimized further. “Including the lines that have yet to start, we have three fast, higher speed lines, and when they become operational, we will see improved efficiency. And when we shifted tools, we were not really able to do sufficient verification of the facilities. We saw disruptions, and we now know the reasons. And so in June, we will start replacing the jigs, and therefore, the number of cells and the yield will improve quite a bit,” Tsuga said.
Among the improvements mentioned by the Panasonic President involved tapping into the local workforce for the Nevada Gigafactory. This, according to the executive, will ultimately lower fixed costs. Tsuga also noted that he expects the demand from Tesla to be good enough for the full capacity of its production lines on the site.
“Through the localization of the workforce, we will have fewer Japanese expats (on Gigafactory 1), and that is progressing. And we are seeing an increase in the number of lines that can be operated only by the local personnel, and that can reduce fixed costs as well. So overall, we can expect improvement. Of course, the demand from Tesla is going to be good enough for the full capacity (of our equipment), that is the assumption. Should that assumption hold, the Tesla battery business can break even this year (for Panasonic),” he added.
Particularly compelling were Tsuga’s comments about the demand for batteries used in Tesla’s flagship vehicles, the Model S and Model X, both of which utilize 18650 cells. While sales of the flagship sedan and SUV have seen a drop in recent months, the Panasonic President stated that demand for the Model S and X could increase once more, especially as Tesla takes the initiative to push the vehicle to customers. “As for Model X (and S), last quarter, we saw a decline, but Tesla is already making efforts and taking actions to revamp that demand. We’re talking with Tesla on this, and so there is upside potential there,” Tsuga said.
The comments from the Panasonic President about the Japanese corporation’s partnership with Tesla all but suggests that the two companies remain closely working with each other to improve the output of Gigafactory 1. Speculations about Panasonic moving away from its partnership with Tesla made the rounds in the media last month, fueled by a report from the Nikkei Asian Review which stated that the Japanese company is freezing its investments in the Nevada-based facility. Tesla responded to the Nikkei report when it was released, explaining that there is far more output to be gained by improving the facility’s existing lines than previously estimated. These comments seem to be in step with the Panasonic President’s recent statements.
Panasonic President Kazuhiro Tsuga’s discussion on Tesla could be accessed here (kindly skip to 33:28 in the video).
Investor's Corner
Tesla is ‘better-positioned’ as a company and as a stock as tariff situation escalates
Tesla is “better-positioned” as a company and as a stock as the tariff situation between the United States, Mexico, and Canada continues to escalate as President Donald Trump announced sanctions against those countries.
Analysts at Piper Sandler are unconcerned regarding Tesla’s position as a high-level stock holding as the tariff drama continues to unfold. This is mostly due to its reputation as a vehicle manufacturer in the domestic market, especially as it holds a distinct advantage of having some of the most American-made vehicles in the country.
Analysts at the firm, led by Alexander Potter, said Tesla is “one of the most defensive stocks” in the automotive sector as the tariff situation continues.
The defensive play comes from the nature of the stock, which should not be too impacted from a U.S. standpoint because of its focus on building vehicles and sourcing parts from manufacturers and companies based in the United States. Tesla has held the distinct title of having several of the most American-made cars, based on annual studies from Cars.com.
Its most recent study, released in June 2024, showed that the Model Y, Model S, and Model X are three of the top ten vehicles with the most U.S.-based manufacturing.
Tesla captures three spots in Cars.com’s American-Made Index, only U.S. manufacturer in list
The year prior, Tesla swept the top four spots of the study.
Piper Sandler analysts highlighted this point in a new note on Monday morning amidst increasing tension between the U.S. and Canada, as Mexico has already started to work with the Trump Administration on a solution:
“Tesla assembles five vehicles in the U.S., and all five rank among the most American-made cars.”
However, with that being said, there is certainly the potential for things to get tougher. The analysts believe that Tesla, while potentially impacted, will be in a better position than most companies because of their domestic position:
“If nothing changes in the next few days, tariffs will almost certainly deal a crippling blow to automotive supply chains in North America. [There is a possibility that] Trump capitulates in some way (perhaps he’ll delay implementation, in an effort to save face).”
There is no evidence that Tesla will be completely bulletproof when it comes to these potential impacts. However, it is definitely better insulated than other companies.
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Tesla (NASDAQ: TSLA) received a price target boost from analysts at Truist Securities, but it came with some criticisms based on a lack of information on several things that investors were excited to hear about regarding future vehicles and AI achievements.
Last night, Tesla reported its earnings from the fourth quarter of 2024, and while it had a very tempered financial showing, missing most of the Wall Street targets that were set for it, the stock was up after hours and on Thursday due to the details the company released regarding its plans for 2025.
CEO Elon Musk stunned listeners last night by revealing plans to launch unsupervised Full Self-Driving as a service in Austin in June 2025. It will be the first time Tesla will offer driverless FSD rides in public, something it has been working with the City of Austin on since December.
Tesla to launch unsupervised Full Self-Driving as a service in Austin in June
It also reiterated plans for affordable models to be launched this year, potentially catalyzing annual growth in deliveries, something it said it expects to resume in 2025.
Tesla was flat on deliveries in 2024 compared to 2023.
The positives during the call were enough for Truist Securities analyst William Stein to raise the company’s price target to $373 from $351. However, Stein’s note to investors showed there was something to be desired despite all the good that was revealed during the call:
Stein said there was “not enough ground-truth” during the call and too much of a focus on “cheerleading” the company’s potential releases this year:
“Too much cheerleading; not enough ground-truth. In Q4, TSLA’s ASP weakness drive revenue, GPM, OPM, & EPS below consensus.”
As previously mentioned, Tesla did report weak financials that missed consensus estimates. What saved the call and perhaps the stock from plummeting on these missed metrics was the other details that Musk revealed, especially the FSD launch in Austin in June.
There were also plenty of things related to the affordable models and other vehicles, like the fact that Tesla plans to include things like Steer by Wire, Adaptive Air Suspension, and Rear Wheel Steering, that helped offset negatives.
Stein saw this as a distraction from what should have been reported:
“While CEO Elon Musk played the role of cheerleader, calling for TSLA’s path to massive market cap by leading in autonomy, management was remarkably short on two critical details: (1) info about new vehicles in 2025 and (2) milestones for AI acheivements, especially FSD. We continue to ask ourselves ‘where’s the beef?’ CY26 EPS to $3.99 (from $4.87). DCF-derived PT to $373 (from $351).”
Tesla did detail some AI milestones, like its record-breaking miles per accident on Autopilot, which was a Q4-best of 5.94 million miles. The Shareholder Deck also outlined major upgrades to AI:
“In Q4, we completed the deployment of Cortex, a ~50k H100 training cluster at Gigafactory Texas. Cortex helped enable V13 of FSD (Supervised)1, which boasts major improvements in safety and comfort thanks to 4.2x increase in data, higher resolution video inputs, 2x reduction in photon-to-control latency and redesigned controller, among other enhancements.”
Tesla shares are up 2.11 percent on Thursday as of 12:05 p.m. on the East Coast.
Need accessories for your Tesla? Check out the Teslarati Marketplace:
- https://shop.teslarati.com/collections/tesla-cybertruck-accessories
- https://shop.teslarati.com/collections/tesla-model-y-accessories
- https://shop.teslarati.com/collections/tesla-model-3-accessories
Please email me with questions and comments at joey@teslarati.com. I’d love to chat! You can also reach me on Twitter @KlenderJoey, or if you have news tips, you can email us at tips@teslarati.com.
Tesla has released its Q4 2024 vehicle safety report. Similar to data from previous quarters, vehicles that were operating with Autopilot technology proved notably safer.
The Q4 2024 report:
- As per Tesla, it recorded one crash for every 5.94 million miles driven in which drivers were using Autopilot technology.
- The company also recorded one crash for every 1.08 million miles driven for drivers who were not using Autopilot technology.
- For comparison, the most recent data available from the NHTSA and FHWA (from 2023) showed that there was one automobile crash every 702,000 miles in the United States.
Previous safety reports:
- In Q3 2024, Tesla recorded one crash for every 7.08 million miles driven in which drivers were using Autopilot technology and one crash for every 1.29 million miles driven by drivers not using Autopilot technology.
- In Q2 2024, Tesla recorded one crash for every 6.88 million miles driven in which drivers were using Autopilot technology, and one crash for every 1.45 million miles driven for drivers not using Autopilot technology.
- In Q1 2024, Tesla recorded one crash for every 7.63 million miles driven in which drivers were using Autopilot technology, and one crash for every 955,000 million miles driven for drivers not using Autopilot technology.
Year-over-Year Comparison:
- In Q4 2023, Tesla recorded one crash for every 5.39 million miles driven in which drivers were using Autopilot technology and one crash for every 1.00 million miles driven for drivers not using Autopilot technology.
Key background:
- Tesla began voluntarily releasing quarterly safety reports in October 2018 to provide critical safety information about our vehicles to the public.
- On July 2019, Tesla started voluntarily releasing annual updated data about vehicle fires as well.
- It should be noted that accident rates among all vehicles on the road can vary from quarter to quarter and can be affected by seasonality, such as reduced daylight and inclement weather conditions.
Don’t hesitate to contact us with news tips. Just send a message to simon@teslarati.com to give us a heads up.
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