On February 2, Panasonic lowered its annual operating profit outlook by 12.5% to 280 billion yen ($2.18 billion) from 320 billion yen for the fiscal year ending on March 31, 2023. The outlook adjustments occurred after reporting low financial results for Fiscal 2023 3Q due to setbacks from a waning global economy and increasingly high raw material prices.
Apart from that, Panasonic’s nine-month net profit attributable to stockholders saw a year-on-year decline from 195.6 billion yen ($1,522,501,500) to 162.9 billion yen ($1,267,972,875). Its operating profit also dropped by 85% to 73 billion yen ($640 million), primarily due to increased raw material costs.
Panasonic to regain profitability through 2170 and 4680 battery production
During the Earnings Call on Thursday, Panasonic announced plans to focus on auto battery supply projects in North America as it aims to grow profits for this fiscal year. That said, the Tesla battery supplier will increase the production of 2170 and 4680 cells used in EVs.
Furthermore, the Japanese tech giant is currently upgrading its Wakayama Factory in Japan to begin testing mass production of the 4680-battery cell, a new type of li-ion battery first introduced by Tesla CEO Elon Musk at an event in 2020. Tesla believes the 4680 battery cell is the key to reducing EV prices.
“…Focus on North America market where we can leverage advantages (high capacity) with established strong business foundation; Achieve profit growth by expanding sales of 2170 cells and commercializing 4680 cells.”
Panasonic
Panasonic also plans to invest 600 billion yen ($4,670,250,000) through March 2025 for a new battery production plant in Kansas. Notably, this is a necessary strategy for Panasonic’s clients to qualify for the federal tax credits under the Inflation Reduction Act.
Tesla woes Panasonic for 4680-battery supply
Leading American automaker Tesla is already producing its 4680 battery in-house. However, its rapidly growing demand requires the EV giant to more supplies. That said, it has also requested Panasonic to produce the new battery cell for its EV offerings.
It must be noted that Panasonic aims to sell the 4680 batteries to Tesla and other automakers as well, as per CFO Hirokazu Umeda at a briefing on Panasonic’s quarterly financial results.
“Panasonic is receiving strong requests from Tesla. We’ll first prioritize supplying Tesla once the verifications are complete.”
CFO Hirokazu Umeda
As for the schedule, Panasonic expects to commence 4680 cell production in Q2.
“A pilot line, created first in Japan, made it possible to start large-scale prototype production in May.”
Panasonic’s energy business CEO Kazuo Tadanobu
Despite missing its earnings forecasts, Panasonic has a strong potential to regain profitability this fiscal year. Many automakers, including Tesla, will undoubtedly need the planned 4680 battery cell supply to offer more potent EVs in North America.
