June 25, 2024

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Panasonic blames lacklustre Tesla demand for cut to profit outlook

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Panasonic, the Japanese electronics group, cut its full-year profit outlook at its battery unit by 15 per cent, blaming slower-than-expected sales of high-end electric vehicles at Tesla, one of its most important customers.

The downgrade by Panasonic, which lowered its full-year operating profit forecast for its battery unit to ¥115bn ($771mn) from ¥135bn, was spurred by slowing demand in North America for Tesla EVs, which do not qualify for tax incentives under the Inflation Reduction Act.

“The IRA has a price ceiling up to $80,000 and since the high-end models exceed that level, demand decreased,” said Panasonic’s chief financial officer Hirokazu Umeda on Monday.

Umeda said that Panasonic had cut automotive battery production in Japan — where it produces the batteries for the more expensive Tesla models including the Model S and Model X — by 60 per cent compared with the first quarter as it tried to bring inventories back to normal levels. 

Tesla has also placed less emphasis on its flagship models, withdrawing them from right-hand drive markets such as the UK, in order to push its more affordable Model 3 and Model Y cars.

“I think we can expect some recovery going forward. Still we did not expect big growth like what we see in the US plant. So we’ll be running the Japan factory based on that assumption,” Umeda added.

The company also produces batteries for cheaper Teslas, which are benefiting from the IRA, at its Nevada factory. Panasonic is investing billions to build a plant in Kansas.

President Joe Biden’s IRA has led to a flurry of investments in US battery manufacturing, though most new EVs made in the country do not yet qualify, either because they are too expensive or because their batteries are still imported.

The cuts by Panasonic follow other warnings about EV demand globally. Tesla, General Motors and Ford have…

2023-10-30 11:04:58

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