April 15, 2019 12:15 PM, EDT

Tesla’s Elon Musk Blames Panasonic Battery Lines for Low Model 3 Output

TeslaOdin Jaeger/Bloomberg News

Tesla Inc. CEO Elon Musk said Panasonic Corp. cell lines at the electric-car maker’s Nevada battery factory have been holding up production of its Model 3 sedans.

“Pana cell lines at Giga are only at ~24GWh/yr & have been a constraint on Model 3 output since July,” Musk wrote in a tweet April 13. “Tesla won’t spend money on more capacity until existing lines get closer to 35GWh.”

Tesla shares tumbled April 11 after the Nikkei reported that the company and Panasonic were freezing plans to expand capacity at the plant near Reno. The newspaper said that because sales of electric vehicles have been below plans, the two companies decided major additional investment now posed too much of a risk.

Panasonic said in a statement April 15 that the factory is not operating at its full 35GWh annual capacity and that it is working on increasing output. The Japanese company said that investments beyond the current level will be decided on jointly with Tesla to match demand. Panasonic’s shares were little changed in Tokyo on April 15.

The Model 3 has been available in the United States since 2017, though the pace of sales in the market has slowed after the shrinking of federal tax incentives, and the company has struggled to get the car quickly into Europe and China. In the March quarter, Tesla delivered 63,000 vehicles, down from 90,966 in the final three months of 2018.

“There is 35 GWh/yr ‘theoretical capacity’, but actual max output is ~2/3,” Musk said in a tweet. “It was physically impossible to make more Model 3’s in Q1 due to cell constraints.”