Study the article below and answer the questions that follow. Panasonic Scouts U.S. Sites for New Tesla
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Study the article below and answer the questions that follow. Panasonic Scouts U.S. Sites for New Tesla Battery Factory Company eyes locations in Oklahoma, Kansas; talks ongoing Plant to turn out '4680' cells for Tesla, potentially others. By Edward Ludlow, River Davis, and Gabrielle Coppola March 14, 2022 Panasonic Corp. is engaged in talks over the site for a new U.S. factory that would supply Tesla Inc. and potentially other electric-vehicle manufacturers with next-generation lithium-ion batteries, people familiar with the matter said. The long-time Tesla supplier is looking at several locations for the multibillion-dollar factory, including one in Oklahoma and another in Kansas, the people said, asking not to be identified bec ause the discussions are confidential. The plant could begin operating as soon as 2024, they said. Though still at an early stage, the plans represent a bold step for Panasonic. Even as it has faced high demand for batteries from Tesla, Panasonic has been slower to build scale compared with rival suppliers LG Energy Solution of South Korea and China’s Contemporary Amperex Technology Co. Tesla partnered with Contemporary Amperex Technology Limited (“CATL”), a battery maker in China. CATL aims to become the world’s largest supplier of electric vehicle (EV) batteries. There are also plans to rapidly expand its partnership with Tesla in China and become its largest battery supplier. China is the largest auto market in the world. A senior source at the Chinese company said last summer that CATL aims to supply half of the battery cells used globally in electric vehicles and rooftop energy storage. In December, CATL began Phase 1 production at its new EV battery factory in China. Once completed, the plant will be the largest EV battery factory in the world with an annual output of 120 GWh. It will be more than three times the size of Tesla’s Gigafactory in Nevada. CATL is investing 17 billion yuan (US$2.6 billion) in the plant and has said it will create about 10,000 jobs once fully operational. Phase I of operations will have an annual capacity of 60 GWh and an additional 60 GWh for Phase 2. Annual output of 120 GWh is enough to power about 1.2 million EVs. In the new U.S. plant, Panasonic plans to make a newly developed, bigger and more powerful “4680” battery, one of the people said. Panasonic may install lines for other batteries at the new facility, as well, though that will depend on customer demand. The new battery design, known as the “4680” format, was unveiled by Panasonic in October 2021 at a media event. The numerical appearance of the battery is based on its dimensions of 46 millimeters (mm) wide and 80 mm long. Panasonic says the new and improved nickel-cobalt-aluminum 4680 cell will store more energy, reduce battery costs by 50% and increase battery production by 100 times by 2030. Because of the larger volume of 4680 batteries, fewer cells and related parts are needed to power an EV, leading Elon Musk to tout the technology as the key to unlocking $25,000 Teslas. Panasonic will start mass production of 4680 batteries in Japan in the fiscal year starting April 2023. Ahead of that, the company is setting up a prototype production line for the batteries, also in Japan. Japanese national broadcaster NHK reported earlier this month that Panasonic was looking at sites in Oklahoma and Kansas to build its new plant. The locations would benefit from being close to Tesla’s new EV factory under construction in Austin, Texas, where it recently established its headquarters. The factory is scheduled to be opened on April 7. A committee in Oklahoma’s Mayes County has been studying a proposal to “entice a business” to set up operations, according to a public document posted earlier this month, though it didn’t identify the party. The timing and budget for Panasonic’s U.S. factory may shift going forward based in part on the company’s experience building 4680 manufacturing lines in Japan over the months ahead, one of the people said. Panasonic is also weighing potential plant locations based on land and labour prices and the availability of state subsidies, the person added. Panasonic has not announced plans to build a new battery factory in the U.S., a spokesperson for the Osaka-based company said Monday. Kazuo Tadanobu, chief executive officer of Panasonic’s energy business, said in an interview with Bloomberg News last week that the location of any potential new factories would be evaluated based on partnerships and the economics of certain areas. Nothing has been decided, he said, adding that for the time being Panasonic is focused on building a “solid foundation” for future 4680 production at its Wakayama facility in Japan. Long Partnership Panasonic and Tesla have a longstanding relationship, with the two companies jointly operating the massive battery plant known as the Gigafactory outside of Reno, Nevada. While Tesla plans to make the 4680 cells in-house, it has asked Panasonic to begin producing them as well. The Japanese company wants to sell the batteries to other automakers, and it’s unlikely Tesla will invest in any Panasonic plant in the U.S., the person said. Panasonic is betting that close to a century of experience making car batteries and its reputation for upholding safety will give it an edge over rivals in producing 4680 cells, which are seen as particularly difficult to mass produce. The Japanese company’s move comes as a slew of automakers and battery producers announce plans to ramp up capacity to manufacture batteries in the U.S. in preparation for a coming wave of EVs. In September, Ford Motor Co. and Korea’s SK Innovation Co. announced plans to spend $11.4 billion constructing an assembly plant and three battery factories in Tennessee and Kentucky, set to begin coming online in 2025. A few months later, Toyota Motor Corp. said it will open its first battery factory in the U.S. in North Carolina, investing $1.29 billion with plans to start production also in 2025.
Answer ALL the questions in this section.
QUESTION 1 (20 marks) By drawing on the relevant theory, and evidence extracted from the article, answer the following questions: According to the article: “…Panasonic was looking at sites in Oklahoma and Kansas to build its new plant. The locations would benefit from being close to the new factory that Tesla is bringing online in Texas, where it recently established its headquarters. A committee in Oklahoma’s Mayes County has been studying a proposal to “entice a business” to set up operations, according to a public document posted earlier this month, though it didn’t identify the party.”
1.1 Critically discuss the cost considerations or factors that would influence Panasonic’s choice of a location for its new U.S factory, and provide evidence from the article to buttress your discussion. ……………………………………………………………………………………………(10 marks)
1.2 The article indicates that Panasonic’s new U.S. factory will employ a competitive strategy that combines the strategy options of differentiation, low-cost leadership and response. By extracting evidence from the article, discuss each of these strategy options in relations to Panasonic’s new U.S.
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