Thread by @BradMunchen

1) More color on Panasonic's tribulations with $TSLA from the recent issue of Japan's Toyo Keizai magazine.

Key point: Panasonic took a price cut on battery cells to $TSLA earlier this year, but Pana's CEO has demanded a price hike the minute $TSLA is profitable (poor sod).

2) Pana's CEO to @elonmusk:

"Until Tesla can generate a profit, we'll help out by supplying batteries at a lower price. But when you generate profits, I want a price hike across the board. We can't continue doing business under these terms."

@elonmusk apparently listened up.

3) Pana's CEO has already visited GF1 3x this year (vs 1x/year normally). This is b/c Pana has fallen behind medium-term profit targets in its automotive business, largely b/c of $TSLA's lower-than-planned output. In 2018, Pana only reached 40% of targeted profits for autos.

4) The article implies that Pana's automotive business is now in a "do or die" situation & has been downgraded to the ranks of a "re-challenge" division w/in Pana's business portfolios. "Re-challenge" divisions are considered a drag on growth at Pana.

5) The article also says that Pana has a policy of selling off or closing down business divisions in the "re-challenge" category if they don't return to a growth path. Could Pana be weighing an exit from its GF1 supply role? This article sure makes it sound like that.

6) GF2 problems: "Because Tesla has 'changed directions' on its solar business, Panasonic is also thinking about getting out of its GF2 joint-venture with Tesla as production has stalled," according to to the article. Can't wait to see what NY State does if Pana pulls out.

7) Panasonic is now aiming for a 5% operating margin in its Automotive business, vs a current level of around 1% (originally, $TSLA biz was set at 10%). This is why Pana's CEO has been pushing Musk to agree on price hikes on Pana cells supplied once $TSLA becomes profitable.

8) Pana's CEO is also quoted as saying that the GF1 bottlenecks on Pana's lines that @elonmusk complained about in April were fixed long ago. Pana said this week that they've increased GF1 cell output from 24GWh/year in April to 28GWh/year as of Q2 end.

9) My take: For Pana's CEO to have already visited GF1 3x this year shows how much of a problem the $TSLA relationship has become. The tone of this article makes it sound like Pana may do something drastic, like write off its GF1 investment, if it doesn't become profitable.

10) H/T to @KawasakiKR11 for finding this great article.