(Bloomberg) -- Panasonic Corp. is gearing up to become a major manufacturer of a new, more powerful battery championed by Tesla Inc. that the Japanese electronics maker says meets the demands of its high-flying customer.
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Over the past year and a half, Panasonic has been working to develop a bigger “4680” battery it intends to sell to the American electric carmaker. Because of the battery’s larger volume, fewer cells and related parts are needed to power an electric vehicle, leading Tesla Chief Executive Officer Elon Musk to tout the technology as the key to unlocking $25,000 EVs.
Developing the new batteries has “taken an immense amount of stamina” over the past months, Kazuo Tadanobu, chief executive officer of Panasonic’s energy business, said at a recent interview at the company’s headquarters in Osaka.
While a common inclination may be to look for ways to pack more energy into already existing cell sizes, changing the entire shape took “considerable nerve,” Tadanobu said, adding that “we didn’t know how they would be received.” Tesla, whose Model 3 starts at around $41,000 with tax incentives, has acknowledged that Panasonic’s new batteries are viable and meet the level of performance it’s seeking, according to the executive.
Panasonic will start mass production of 4680 batteries in the fiscal year starting April 2023, with plans to establish two additional production lines as well as facilities at its Wakayama factory in western Japan. Ahead of that, the company is setting up a prototype production line for the batteries, also in Japan.
The push into next-generation batteries is a bold new step for the Japanese electronics giant. Even as it faced soaring demand for batteries from Tesla, Panasonic has been slower to build scale compared to rivals LG Energy Solution and Contemporary Amperex Technology Co., instead touting the safety advantage of its cells and stressing that it prioritizes profits over market share.
More recently, signs have emerged that Panasonic may have lofty ambitions for its new battery. Last week, Japanese broadcaster NHK reported that the company is eying the construction of a new factory in the U.S. to supply Tesla with what will probably be 4680 cells.
With regard to a new factory, Tadanobu said that at this point nothing has been decided. The location of potential new plants will be evaluated based on partnerships and the economics of certain areas, he said, adding that for the time being Panasonic is focused on building a “solid foundation” for future 4680 production at its Wakayama plant in Japan.
Analysts, and even Musk himself, have warned of the difficulties associated with mass producing 4680 cells. The battery’s bigger size and design makes it more susceptible to particle contamination, a frequent cause of EV battery fires that occurs when minuscule metal pieces find their way into the center of a cell.
Tadanobu sees Panasonic’s attention to safety helping it maintain an edge going forward, even as Tesla moves to produce its own 4680 cells and other rivals are also rumored to be considering production. Panasonic’s advantage lies in its ability to “use craftsmanship to maintain safety even while raising the performance of a battery,” Tadanobu said. After leading development of the cells, Panasonic will work to retain its top spot, Tadanobu said. “We don’t want to lose.”
Ultimately, what’s behind Panasonic’s effort with the new batteries, according to Tadanobu, is a strong belief that the cells have the potential to change the world of transport. The 4680 battery will have a “considerable impact,” in helping lower the cost of EVs, enabling them to spread more widely, he said. That, in turn, promises to help lower carbon emissions around the globe, the CEO said.
From an environmental perspective, “electrifying vehicles is the most impactful revolution that’s happening within our society,” Tadanobu said. Panasonic is working on 4680 batteries “because we see them as a new path forward,” he said.
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