Tesla disputed a report that the carmaker and its partner Panasonic have paused expansion of the Gigafactory 1 manufacturing facility.
The Nikkei Asian Review reported Thursday that Panasonic and Tesla are reconsidering plans to increase the factory's capacity 50 percent by 2020, as investors increasingly worry about possibly weakening demand for Tesla cars.
Tesla shares fell 3% in intraday trading Thursday.
The $4.5 billion Gigafactory near Reno, Nevada, is where Panasonic and Tesla jointly make the battery packs for Tesla's cars and energy storage products, and where parts of the Model 3 sedan are made. Tesla said in its fourth-quarter letter to shareholders that it will "most likely" build the recently unveiled Model Y crossover at the factory.
The news comes a week after Tesla released quarterly delivery numbers that missed Wall Street expectations by a wide margin.
Tesla did say U.S. 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.
Here is Tesla's full statement:
"Both Tesla and Panasonic continue to invest substantial funds into Gigafactory. That said, we believe there is far more output to be gained from improving existing production equipment than was previously estimated. We are seeing significant gains from upgrading existing lines to increase output, which allows Tesla and Panasonic to achieve the same output with less spent on new equipment purchases. However, we will of course continue to make new investments in Gigafactory 1, as needed. Most importantly, contrary to what is implied in this report, our demand for cells continues to outpace supply. It remains the fundamental constraint on Tesla vehicle and Powerwall/Powerpack production."
Panasonic did not immediately respond to a request for comment from CNBC.
Clarification: This story has been updated to clarify that Tesla said in its fourth-quarter letter to shareholders that it will "most likely" build the Model Y at the Gigafactory.