Tesla CEO Elon Musk frequently calls, emails and text the CEO of Panasonic, demanding lower battery prices. Inside the strained relationship at the heart of the electric-car business.
By Tim Higgins and Takashi Mochizuki Oct. 8, 2019 12:02 pm ET Last year, Elon Musk puffed a marijuana blunt during a live-video interview in California. Halfway around the world, executives at Japan’s Panasonic Corp. PCRFY -1.63% , Tesla Inc. TSLA 1.67% ’s automotive battery supplier, watched with alarm.Five years after committing to invest billions of dollars in a shared battery factory in the Nevada desert, Panasonic has a strained relationship with the electric-car pioneer.
At this year’s annual meeting in June, shareholders criticized Panasonic for getting in over its head. Hurt by the Tesla problems, Panasonic has seen its stock fall nearly 50% since the start of last year. Mr. Musk, in an email, said there was no breakdown in the partners’ relationship. He shared a recent message he received from Mr. Tsuga that said “it is not an easy business environment for both of us, but I strongly believe we have to strengthen our partnership even more.”
Share Your Thoughts Can Tesla make a sustainable, mass-market business out of electric cars? Join the conversation below. Mr. Tsuga became CEO in 2012, just as the Model S was rolling off the line. He bought into Mr. Musk’s next big bet: the Model 3, Tesla’s first car for the masses. Mr. Musk had been unhappy with the price of batteries Panasonic supplied exclusively for the Model S and had made plans for Tesla to build its own, according to people familiar with the effort. After months of work, however, the costly plan was scrapped, and the two companies worked closely to bring out the Model S, followed by the Model X sport-utility vehicle in 2015.
Mr. Kelty’s fluency in Japanese and experience at Panasonic helped Tesla navigate the bureaucracy at the supplier, according to people who worked with him. He would sit in meetings between Mr. Musk and Panasonic executives and act as a filter for both sides, softening the tone when the rhetoric got heated, these people say.
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Musk pushes Panasonic to invest more in Gigafactory to increase capacity while also asking for help in building a factory in China.0Gigafactory begins. Musk speeds up promise of 500,000 vehicles for 2018 and predicts one million for 2020. Mr. Yamada, who had spent years coaxing Panasonic into a relationship with Tesla, left the company because he reached the retirement age. He then joined Tesla to help lead the Gigafactory project, assuming Mr. Kelty’s role as a guide. Panasonic’s Mr. Tsuga was now without the deal’s biggest advocate in Japan.
Mr. Tsuga, frustrated with the top-down structure, decided he needed to tackle the problems personally, CEO to CEO. This year, he started traveling to the U.S. once a quarter to meet Mr. Musk in Nevada, the Bay Area or Los Angeles.
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