Panasonic Cuts Battery Unit's Profit Outlook, Warns on High-End EV Sales
Updated: Jan 8
Panasonic Holdings, a major supplier to Tesla, has announced a reduction in its automotive battery production in Japan for the September quarter.
The company has also lowered its annual profit forecast for the battery division by 15%.
This move comes as a result of a global slowdown in electric vehicle (EV) sales, particularly in the high-end segment.
Panasonic's less optimistic outlook for its battery segment aligns with similar warnings issued by other automakers and suppliers. The weaker growth in major economies, including China and Europe, has contributed to this trend. The company has revised its full-year operating profit forecast for the energy unit responsible for manufacturing batteries for Tesla and other automakers from 135 billion yen to 115 billion yen ($769 million).
According to Panasonic, the adjustment in automotive battery production in Japan was made to maintain an appropriate inventory level in response to rapidly declining demand. The company's presentation materials state that the uptake for high-end EVs in North America has slowed, partly due to changes in consumer demand caused by the U.S. Inflation Reduction Act.
Despite the challenges in the high-end EV market, Panasonic has reported steady production at its North American operations. The company has also observed strong sales of vehicles eligible for tax credits. However, South Korean battery firm LG Energy Solution recently warned of slowing revenue growth in 2024 due to global economic uncertainties affecting the outlook for EV sales.
Tesla, too, has taken a cautious approach to expanding its EV production capacity. CEO Elon Musk expressed concerns that higher borrowing costs could hinder potential customers from affording their vehicles, despite price cuts. General Motors has also scaled back the launch of several EV models to reduce costs and cut back on EV product spending.
Panasonic has reduced its automotive battery production in Japan and lowered its annual profit forecast for the battery division by 15%.
The global slowdown in EV sales, particularly in the high-end segment, has prompted this move.
Weaker growth in major economies, including China and Europe, has contributed to the decline in EV sales.