Tesla and Panasonic hold off on Gigafactory expansion

A drop in demand for Teslas has raised concerns on Wall Street.

Tesla and Panasonic are delaying plans to expand the electric car maker's Gigafactory 1 battery plant in Nevada. The two companies decided to freeze spending on the world's largest EV battery plant following less-than-stellar demand of new Teslas, reported Nikkei Asian Review. The two companies had initially planned to raise capacity by 50 percent by next year. Panasonic has also apparently canceled plans to invest in Tesla's new Gigafactory in Shanghai, as well.

In light of the news, Tesla's stock fell by nearly three percent in early trading on Thursday. Tesla said in a statement on Thursday that it would invest in the Nevada factory "as needed". "We will of course continue to make new investments in Gigafactory 1, as needed. However, we think there is far more output to be gained from improving existing production equipment than was previously estimated," a Tesla spokesperson said to Electrek.

While Nikkei gave no details of its sources, neither Tesla nor Panasonic denied the reports on Thursday. Panasonic's partnership with Tesla hasn't exactly been lucrative for the Japanese electronics manufacturer; it lost more than $180 million dollars on battery production by the end of its financial year. Panasonic announced in January that it was partnering with Toyota to make electric car batteries, suggesting that the company isn't putting all of its eggs just in Tesla's basket.