Tag: Panasonic

OM in the News: Tesla Needs Its Battery Maker, But a Culture Clash Threatens

A Tesla Model S being fitted with a battery pack

In 2008, Tesla began delivering its first EV and wanted a partner capable of manufacturing lithium-ion batteries on a mass scale. But years after committing to invest billions of dollars in a shared battery factory in the Nevada desert, Panasonic has a strained relationship with Tesla. The Gigafactory was supposed to boost profits, cement Panasonic’s future in automotive electronics and give Tesla easy access to the most important—and expensive—component of its vehicles. “Instead,” writes The Wall Street Journal (Oct. 8, 2019), “the partnership has exposed a culture clash between the conservative, century-old Japanese conglomerate  and the 16-year-old Silicon Valley upstart built around Mr. Musk’s vision for upending 100 years of automotive tradition”.

Musk has pushed Panasonic to cut what it charges for the battery cells as Tesla builds another costly factory in China. Panasonic has resisted the pricing requests, and is hesitant to go into China with Tesla. Production has fallen behind schedule, and the race to catch up has thrown the Panasonic battery unit deeper into the red. Tesla, for its part, needs the Gigafactory to continuously improve efficiency and reduce manufacturing costs so it can lower its car prices, which it sees as critical to mainstream success.

An early source of tension was missed deadlines. Panasonic would rush to supply Tesla’s production targets only to find the auto maker behind schedule. Tesla unveiled the Model 3 to overwhelming interest, leading Musk to try to speed up production plans. In 2016, he promised the plant needed to make enough batteries for 500,000 vehicles by 2018—2 years ahead of the original plan. That meant the battery factory had to speed up plans in a round-the-clock operation. In April, 2019 Musk blasted Panasonic, saying it was operating at a pace that constrained Model 3 production, even though it appears Tesla will sell only 400,000 EVs this year.

Classroom discussion questions:

  1. Unhappy with the price of batteries Panasonic supplied for the Model S, Tesla made plans to build its own. But after a few months the plan was scrapped. Why do you think this happened?
  2.  Describe the relationship between these 2 companies.

OM in the News: Japan’s Robot Revolution

A withering factory town in Japan is looking for revival through a dose of Prime Minister Abe’s “robot revolution.” Kadoma’s population has declined 13% as the nation ages, prompting mergers among schools and emergency services departments. Factories can’t find enough people to run assembly lines, further threatening an industrial base that includes titan Panasonic and smaller businesses like Izumo, a maker of industrial rubber.

Yet Izumo’s CEO doesn’t believe the solution involves finding more people. He’d rather find more machines to do the work so his company can capitalize on Abe’s plan to quadruple Japan’s robotics sector into a $20 billion industry by 2020. “We want to create a mass-production system run by robots and tap into the global market,” he said.

robot-data“The open embrace of robots in Japan is in stark contrast to the U.S., where automation is seen as yet another threat to working class-jobs in manufacturing,” writes New Equipment Digest (Dec. 22, 2016). It also reflects Japan’s aversion to immigration, and a hope that machines can keep its factories competitive vs. rivals like China with lower labor costs. Abe has urged companies to distribute the machines into “every corner of our economy and society” — including the manufacturing, health-care and service industries. Japan aims to double the market for manufacturing robotics by 2020, while increasing the service robots market 20-fold. The development and deployment of robots — and the software to control them — is expected to save 5.7 million Japanese jobs through 2031. Robots also could shave 25% off factory labor costs in Japan.

Japan also could export its robot revolution to China, which has made robotics a focus of its industrial policy and is the world’s biggest buyer of the machines. China wants to employ 150 robots for every 10,000 factory workers — triple the current ratio.

Classroom discussion questions:

  1. Discuss the U.S. move to increase factory jobs in this context?
  2. How does Japan differ from other developed countries?