Nikkei did not provide details on the sources of the report.
Having already splashed out $4.5bn on the factory, the two manufacturers had made a decision to freeze their spending plans, although Panasonic was looking into alternative Tesla projects in which to invest, Nikkei reported.
Tesla and its partner Panasonic are scrapping plans to upgrade the capacity of Tesla's massive Nevada Gigafactory according to a report out of Japan that surfaced this morning.
Tesla did say US orders for Model 3 vehicles significantly outpaced what it was able to deliver in the first quarter, and the company reaffirmed its prior guidance of 360,000 to 400,000 vehicle deliveries in 2019.
Batteries produced there aren't just for Tesla's cars, mind.
Nikkei itself quotes a Tesla spokesman with the words: "We will, of course, continue to make new investments in Gigafactory 1, as needed".
The report concerned investors because it could impact Tesla's production and delivery rates.
Company results have also been up and down. Tesla has stated that 2019's goal is to produce 360,000 electric vehicles.
Panasonic and Tesla had previously planned to increase the factory's capacity by 50 percent by 2020, but have since reconsidered their plans, the Nikkei Asian Review said.
This deal was meant to reduce battery production costs to levels "previously unobtainable in battery cell and pack production". Panasonic said that it was studying various possibilities with regards to the plant. By this, Musk will have to re-think of a new strategy to make his dream of becoming the world's premier EV manufacturer into reality.
In January, the Toyota Motor Corporation and Panasonic announced a new joint venture to develop advanced automotive prismatic batteries for use in Toyota electric vehicles.
Once the Nikkei report surfaced, shares of Tesla dropped almost three percent because of what the report implies: EV demand may not be growing as quickly as expected and in that case, costly upgrades to produce more batteries wouldn't be needed. Tesla is expected to report first-quarter earnings on April 24, this is expected to be a key report for the company.