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Elon Musk Rubbishes Reuters’ Report On Twitter

By Caroline Diana
Published on: 21:28 PST, Jun 7, 2016

Tesla CEO Elon Musk took to Twitter to clarify a Reuters’ report that stated that Tesla Motors is in talks with Samsung SDI to procure batteries and other energy storage products for its Model 3 electric car.

Refuting this claim, Musk on Tuesday night tweeted that the report by Reuters was false. “Would like to clarify that Tesla is working exclusively with Panasonic for Model 3 cells. News articles claiming otherwise are incorrect,” tweeted the Tesla chief.

A few minutes later, bringing more speculations about Tesla and Panasonic to a halt, Musk put up a follow-up tweet that said, “S and X cells are also Panasonic.”

https://www.youtube.com/watch?v=7VF94Zag0-c

In a statement sent to The Verge, a Tesla spokesperson said that the company “works with all the leading battery suppliers around the world” but refused to comment on details of programs with specific suppliers. “Panasonic has been our battery cell supplier throughout the Model S and Model X programs,” the statement reads, with Tesla “work[ing] very closely with Panasonic to ramp up battery cell production at the Gigafactory for Model 3.”

It all started when Reuters quoted an anonymous source closely involved in Tesla operations, who revealed that Tesla and Samsung SDI are holding talks to clinch a deal that could involve Tesla Motors procuring batteries from the latter.

According to the source, Tesla, which is now procuring its batteries from Panasonic, might strike a deal with Samsung SDI if the sales exceed expectations. The source, however, declined to specify what level of sales would clinch a deal for Samsung. “It remains to be seen whether the orders will translate into actual sales,” the source told Reuters.

The fact remains, however, that Tesla had dealings with Samsung in the recent past. On April 19, the Tesla Motor factory in California received a huge consignment of battery cells from the South Korean giant. These were similar to the ones that Panasonic has been doling out to Tesla.

According to the bill of lading between the two companies, which showed up at the Oakland port on April 19, clearly indicated that Tesla was buying more than 120 tons of Samsung SDI 18650 battery cells— a format similar to the ones made by Panasonic. This doesn’t mean that the Japanese manufacturer will “lose face” to its South Korean rival, as any deal that Tesla strikes with Samsung or other battery makers will not absolve or terminate any prior deal with Panasonic. Nevertheless, this move can sour Panasonic’s relations with Tesla, resulting in the former taking less interest in the Gigafactory.

“We will do our best to move up the schedule if requested,” Yoshio Ito, head of Panasonic’s automotive and industrial systems (AIS) division, told Reuters in May, adding that Panasonic aims to contribute $1.6 billion to Tesla’s $5 billion “Gigafactory” in phases.

Panasonic’s partnership with Tesla is a game changer for the Japanese company. Shortcomings in any form will destroy Panasonic’s deliberate attempt to withdraw from its traditional low-margin consumer electronics business. Panasonic’s new focus on making automotive components and other related parts will make it a pioneer in the booming EV segment, particularly if it associates with Tesla, which is constantly innovating the automotive space.

According to recent news reports, Panasonic plans to nearly double its automotive business revenue to $18.2 billion over the next three years, representing roughly 20% percent of overall sales. However, Panasonic shares fell 2% on Monday following Nikkei’s report on Tesla striking a deal with Samsung.

So far, Tesla has been buying battery only from Panasonic. The quality-centric Tesla chose to opt for Panasonic, as their batteries are said to have better performance and quality than those made by other companies. South Korean company LG Chem also supplies batteries to Tesla, but this is purely for Tesla sports cars.

[Photo by Justin Pritchard/AP Images]

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