Japanese electric appliance manufacturer Panasonic, which partnered with Tesla to be its key battery provider will continue to make new investments in American company’s Gigafactory as needed but believe they can squeeze more out of existing resources than previously planned.

Additionally, Panasonic stated that it was closely analysing the demand for electric cars in the market before making any further investments in expanding the capacity of the Nevada plant. Responding to a report by Japan’s Nikkei which suggested that the two companies had frozen previous plans to raise the capacity of the plant, a Tesla spokesperson said: “Both Tesla and Panasonic continue to invest substantial funds into Gigafactory.”

Panasonic is also reportedly pondering over suspending its planned investment in Tesla’s new Shanghai plant and will provide technical support along with a small number of batteries instead.

“Panasonic shares have been dragged down by various Tesla woes,” Masayuki Otani, chief market analyst at Securities Japan. “Turning cautious about further investments is good for Panasonic. It helps the company reduce the influence of Tesla.”

Panasonic is currently the sole battery provider for Tesla which is, in turn, the company’s biggest electric vehicle battery client. Earlier in February, Tesla said it had agreed to buy US energy storage company Maxwell Technologies Inc, plunging Panasonic’s shares.

Earlier in February, Tesla said it had agreed to buy US energy storage company Maxwell Technologies Inc, plunging Panasonic’s shares.

Ahead of that, in November, Tesla CEO Elon Musk said that the company would manufacture all its battery modules and packs at its new Shanghai factory, to encourage diversification of sources. Panasonic is also reportedly pondering over suspending its planned investment in Tesla’s new Shanghai plant and will provide technical support along with a small number of batteries instead.

The Japanese, in October, said that it would prioritise building additional capacity at the Gigafactory over China. Tesla shocked its investors by reporting a 31 per cent fall in deliveries for the first quarter of 2019. The company reasoned the fall with transit delays in its first shipment of Model 3s to Asian and European markets.