Automotive Purchasing News Review 4 August 2014 - page 12

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28 April 2014
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It’sofficial:TeslaandPanasonictobuildGigafactory
Jul 31, 2014
Tesla Motors and Panasonic Corp have
jointly confirmed they are teaming up to
build the so-called Gigafactory, as Tesla
boss Elon Musk has christened it. As
Automotive Purchasing editor Drew Hillier
reports, under the agreement announced
today (July 31), the much-touted $5 billion
Mother of All Lithium-ion Battery Factories
will see Tesla provide and manage land,
buildings and utilities, while Panasonic is
to make and supply the actual cells.
The official announcement has been
expected for some time, with Elon Musk
(pictured) talking about working with
the Japanese battery-making giant ever
since he mentioned the plan to build
a super factory during an earnings call
last November. It was the same day that
Tesla announced an expanded purchase
agreement with Panasonic, after Musk had
made it known that a shortage of battery
cells had crippled its ability to market and
deliver cars as quickly as it would’ve liked.
Steady, long-term supply
Tesla will do the final assembly of
packaging the battery cells into battery
packs; the company has built an expertise
in designing battery packs and developing
the software for managing the batteries’
operation. Musk said building the battery
factory is necessary to ensure that the
company has a steady, long-term supply
that will match Tesla’s sales goal well into the
future. The carmaker still plans to buy battery
cells from Panasonic’s factories in Japan.
Tesla plans to roll out its third model, an
SUV called Model X, followed by Model 3,
which should be its cheapest car yet. The
electric car innovator is also bullish about
making money by selling batteries to homes
and businesses for energy storage. Those
battery systems could serve as a backup
power supply, especially during blackouts,
or as a way to manage solar energy
generation and use. Musk has talked about
adding some design panache to developing
new energy storage systems. The company
already is a supplier to SolarCity, a solar
panel installer, with Musk as its chairman.
Extending the alliance
Tesla plans its Gigafactory to be big
enough to produce 35 gigawatt hours of
cells and 50 gigawatt hours of battery packs
by 2020, the company said. The gap would
be filled by cells from Panasonic’s factories
in Japan or other cell suppliers. Indeed,
Panasonic already has an agreement to
provide 2 billion cells to Tesla through 2017,
but a stake in the new plant will further
extend the alliance as Panasonic aims to
double sales at its auto division in four years.
Henceforth, the Japanese firm is expected to
be the lone battery maker working with Tesla.
To supply batteries for Tesla's luxury
electric cars, Panasonic is already ramping
up production at one Japanese plant while
resuming operations at an idled plant
in western Japan. Some analysts have
questioned whether an additional plant in
the US may lead to overcapacity if Tesla car
sales don't expand as anticipated.
Investment rumours
While Musk has said he expects the
factory to cost $4 billion to $5 billion, with
$2 billion coming from Tesla, the fresh
announcement didn’t confirm how much
Panasonic will invest in the factory. However,
Japanese newspaper Nikkei reported this
week that the battery conglomerate will
likely pump in between $194 million to $291
million initially.
Remy Int postsQ22014 results
Jul 31, 2014
Remy International Inc has announced its
financial results for the second quarter
ended June 30, 2014, seeing higher revenue
and profit over the same period last year.
Founded by the Remy Brothers in 1896,
Pendleton-headquarteredRemy International
Inc is a leading global manufacturer and
remanufacturer of alternators, starter motors
and electric traction motors, with global
operations across five continents and 10
countries.
Top-line growth
Jay Pittas, Remy International President
and CEO commented, "The second quarter
was a solid one for us with the business
performing as expected with higher revenue
and profit versus the second quarter of 2013.
Our top line growth strategies are succeeding
with the trailing three quarter's revenue up 7
percent versus the prior period. We continue
to undertake initiatives to grow the top line
and secure new business as well as take
steps to improve operating efficiencies. By
executing our plan, we will drive superior
long-term value for stockholders."
Second quarter highlights include:
Net sales $299.3 million $282.3 million
$599.6 million $564.1 million
Net income $10.0 million $11.5 million
$19.4 million $13.3 million
Diluted earnings per share $0.32 $0.36
$0.62 $0.40
Adjusted net income $10.8 million $13.3
million $22.2 million $22.6 million
Adjusted diluted earnings per share $0.34
$0.42 $0.70 $0.70
Net cash provided by (used in) operating
activities $5.1 million $6.4 million $(4.1)
million $(9.9) million
Corporate credit rating
On May 9, 2014, Standard & Poor's Ratings
Services upgraded Remy’s corporate credit rating
from B+ to BB- on improved financial metrics
reflecting its leading position in North America
as a supplier of starters and alternators to original
equipment manufacturers and the aftermarket.
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