"We don't have any plans at the moment to set up a production site in China for Tesla's Chinese business," CEO Kazuhiro Tsuga told reporters at a strategy briefing on Friday.

"It is up to Tesla to decide whether it would use Chinese-made batteries from other manufacturers or get batteries from our Gigafactory 1 (in Nevada)," he said.

The comments reflect Panasonic's growing caution about its joint battery business with Tesla, which has yet to show sustained profits. Tsuga earlier this year admitted he underestimated risks associated with Tesla.

Reuters has reported that Tesla is in advanced talks with South Korea's LG Chem Ltd to source batteries for vehicles to be made in its Shanghai plant.

(Reporting by Makiko Yamazaki; Editing by Himani Sarkar)