Tesla Battery Supplier Panasonic To Begin Mass Production Of New Longer-Range EV Batteries In 2023: Report

Tesla Inc TSLA supplier Panasonic Corporation PCRFY has fallen behind China's CATL and South Korea's LG Energy Solutions in battery manufacturing in recent years.

The Japanese firm is now clawing its way back with renewed push and investment.

What Happened: Panasonic is planning to start mass-producing new lithium-ion batteries that have the potential to increase the range of the EVs by 25%, the Nikkei reported. Production is likely to start as early as 2023 and the first deliveries are to be made to Tesla, the report added.

Panasonic has reportedly started developing the new 4680 battery at Tesla's request. A Tesla Model S armed with the new battery will have a range of 750 km as opposed to its current range of 650 km.

The new battery will be twice as big as the earlier versions and have a fivefold increase in capacity, allowing automakers to cut down on the number of batteries used, the report said. Additionally, these batteries would be 10-20% cheaper, Nikkei added.

Panasonic is reportedly expanding its plant in Wakayama prefecture with an additional investment of 80 billion yen ($704 million) to manufacture the new Tesla batteries.

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Why It's Important: The accent on developing efficient and cost-effective batteries is important, as batteries account for roughly 30% of the total EV cost.

Panasonic reportedly plans to partially start operations this year to establish safe, efficient processes before beginning mass production. Mass production of the new batteries will subsequently be expanded to plants in the U.S. or other countries.

PCRFY Price Action: Panasonic shares slipped 0.88% to $11.26 Monday at publication.

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Photo: Courtesy Tesla Inc.