A new report paints the Tesla-Panasonic relationship as hitting some hard times and it happens just as Tesla is moving to manufacture its own battery cells.

A new Wall Street Journal report is citing sources within Panasonic that describe a tumultuous relationship with Tesla, which has become an important partner for the battery manufacturer.

Over the last few years, Tesla has become the world’s largest consumer of li-ion battery cells and Panasonic has been its main supplier since the days of the original Tesla Roadster.

In preparation for the Model 3, the two companies partnered on Gigafactory 1 in Nevada where Panasonic produces battery cells that Tesla then assembles into battery packs at the same location.

The factory quickly became the largest li-ion battery factory in the world, but earlier this year, Tesla said that Panasonic’s battery cell production was limiting Model 3 production.

In the report, sources at Panasonic say that the two companies are arguing over the cost of the battery cells, the timeline to ramp up production, and “culture”:

“Inside Panasonic, opposition to the alliance heated up. While Mr. Tsuga liked the way Mr. Musk would set a difficult target and meet it—at least sometimes—other Panasonic executives and board members found the entrepreneur’s antics off-putting. That included the September 2018 incident in which he appeared to smoke pot in a video interview with comedian Joe Rogan. In Japan, use of marijuana is a serious crime, and celebrities found with it often are compelled to apologize publicly.”

Elon Musk’s self-described “nano management” style also reportedly clashes with Panasonic:

“Mr. Musk’s management style also bothered Panasonic. With hundreds of thousands of employees, Panasonic was used to giving its units autonomy to solve problems. Those units might move slowly, seeking Japanese-style consensus, but they didn’t have to kick everything up to the executive suite in Osaka.”

The report says that Mr. Tsuga, Panasonic’s CEO, is now one of the only remaining proponents of the partnership with Tesla.

Tesla lost two executives who were responsible for the relationship with Panasonic over the last year.

However, Panasonic just hired a former long-time Tesla battery executive Celina Mikolajczak for a new senior role at the Gigafactory.

The more difficult relationship also happens as Tesla is moving to manufacture its own battery cells.

Electrek’s Take

The WSJ report focuses on a “culture” clash between the two companies leading to a strained relationship, but it didn’t even go into the fact that Tesla is moving to produce its own battery cells.

We have seen a ton of evidence of that recently, including Tesla acquiring a battery production expert company, Tesla job listings for battery manufacturing, and several Tesla executives all but confirmed the move during the last shareholder’s meeting.

It’s clear that this is the biggest strain on Tesla’s relationship with Panasonic.

On their side, Panasonic has also made a battery partnership with Toyota, so they are also moving on their side.

I think the two companies will still have a relationship going forward, but it will be more of a regular supplier-buyer relationship than the more wide-ranging relationship.

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