Panasonic Corporation and Tesla will continue to make new investment in the US electric carmaker’s Gigafactory as needed, but believe they can squeeze more out of existing resources than previously planned, Tesla said.

Separately, Panasonic said it was watching the demand situation in the electric car market before making any further investments in expanding the capacity of the Nevada plant.

The two companies were responding to a report by Japan’s Nikkei that said they had frozen previous plans to raise the capacity of the plant, which supplies battery packs for Tesla cars. “Both Tesla and Panasonic continue to invest substantial funds into Gigafactory,” a Tesla spokesperson said. “That said, we believe there is far more output to be gained from improving existing production equipment than was previously estimated.”

Giving no details of its sources, the Nikkei reported that financial issues had led the companies to rethink plans to expand the capacity of Gigafactory 1 by another 50 per cent next year.

The business daily said the companies had already together invested $4.5 billion in the facility and had been planning to expand the plant’s capacity to the equivalent of 54 gigawatt hours (GWh) a year in 2020 from 35 GWh at present. The 35 GWh capacity can produce batteries for about 500,000 electric vehicles a year, a source familiar with Tesla’s plans said, meaning that the previously planned expansion would have made the capacity enough for around 770,000 electric vehicles.

“Panasonic established a battery production capacity of 35 GWh in Tesla’s Gigafactory 1 by the end of March 2019 in line with growing demand,” Japan-based Panasonic said in an email.

“Watching the demand situation, Panasonic will study additional investments over 35 GWh in collaboration with Tesla.”

Reuters