Do Tesla, Panasonic Differ Dramatically On Growth Of Electric Car Batteries?

The rate of sales growth for electric cars may be the greatest unknown in the auto industry as companies prepare to spend billions of dollars on new products.

Electric-car startup Tesla Motors [NSDQ:TSLA] projects annual sales to increase by 50 percent for years to come.

Other makers, industry analysts, and advocates have wildly differing expectations for the numbers of plug-in cars.

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But much discussion erupted this weekend after reports that Tesla and its own battery-cell supplier, Panasonic, differed significantly on their views of future growth in the market for electric-car batteries.

In a presentation to investors given May 20, Panasonic forecast sales growth for automotive batteries of just 11 percent over the next 12 months--despite the anticipated launch and production ramp-up of the Tesla Model X electric SUV.

Panasonic sales targets for automotive batteries, 2016-2019, from May 2015 investor presentation

Enlarge Photo

In fact, Panasonic's four-year compound average growth rate was projected at 16.5 percent.

That's not particularly consistent with Tesla expecting to produce 500,000 cars a year by the end of 2020.

A subsequent analysis on the investor site Seeking Alpha suggested that the two projections could in fact be reconciled.

ALSO SEE: Will Tesla Model 3 Electric Car Hit 2017 Production Date?

That would take into account falling lithium-ion cell cost--meaning any given dollar amount in future years equates to higher cell volume--and differences in the timelines between Tesla and Panasonic.

But under such a scenario, Tesla Motors would provide a majority of Panasonic's automotive-cell revenue by 2020. That shouldn't be unexpected if the gigafactory goes into volume production as planned.

The later analysis does note, cautiously, "Tesla's projections for 500,000 in vehicle sales in 2020 remain subject to a large amount of execution risk."

Translated, that means that many things can still go wrong between now and then.

We don't do deep financial analysis or stock tips here at Green Car Reports, so we'll leave it to Tesla investors and financial analysts to debate this one.

But the discussion that erupted over the news indicates just how uncertain and elusive the sales projections for electric cars remain, let alone any consensus on a future "tipping point" at which cars with plugs will routinely be considered by mainstream buyers.

Some of it may be cultural.

Panasonic is now an established global Japanese corporation, and proceeds more slowly and conservatively in line with its culture--and that of those parts of the Japanese business world that value incrementalism over radical disruption.

Tesla Motors, on the other hand, comes out of Silicon Valley--where optimistic and aggressive projections are not only a way of life, but virtually required to attract attention and funding for any particular product.

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Source: Do Tesla, Panasonic Differ Dramatically On Growth Of Electric Car Batteries?