Panasonic Holdings Corp.’s decision not to rush into expanding capacity to build batteries has been validated by slower global demand for electric vehicles, Chief Executive Officer Yuki Kusumi said.
The supplier of lithium-ion batteries to Tesla Inc. is getting ready to start production at a second U.S.-based factory in Kansas, but has frozen plans for a third plant. Panasonic has been making batteries in Nevada since 2017, helping the carmaker ramp up volume sales for Tesla’s Model 3 and Model Y cars.
Panasonic may also be poised to benefit from having factories in the U.S. as Tesla and others seek to reduce their reliance on Chinese battery makers, because of the tariffs being imposed on items imported into the U.S. and incentives provided under the Inflation Reduction Act. While Honda Motor Co., Hyundai Motor Co. and others are expanding battery production in the U.S., Panasonic is well ahead of its rivals.
At the same time, Kusumi is seeking to execute a broader overhaul of the century-old Osaka-based company, which committed last week to cutting 10,000, or more than 4%, of its workforce to eliminate non-growth operations and boost profitability. The goal is to focus more on energy storage, data-centre power and AI-driven process automation, while building on its EV battery and home appliance businesses.
“The talk of a third factory was based on anticipation of large-scale EV adoption but I doubted we’d see a quick transition, especially in the U.S., because of issues such as charging infrastructure, battery cost and reliability,” Kusumi said in a group interview. “As things stand now, I’m relieved we didn’t move forward with securing a location for a third factory.”
Slower uptake of EVs, at least in markets outside China, have forced carmakers and suppliers to scale back their expansion plans.
In December, Panasonic said it had turned down almost US$700 million in state incentives to build a manufacturing site in Oklahoma.
Nissan Motor Co. recently scrapped plans to build a battery plant in Fukuoka, Japan, to redirect cash and resources toward a new turnaround plan.
Panasonic is getting closer to full-scale battery production in Kansas, on track for the first half of the current fiscal year, which runs from April through March. Kusumi said a key customer had been pushing the manufacturer to get the plant online soon in order to procure batteries from the U.S. instead of China.
Tesla, Panasonic’s biggest battery customer, is facing slumping sales and rising costs stemming from ongoing U.S.-China trade tensions. It’s also a key supplier to Toyota Motor Corp., Subaru Corp. and Mazda Motor Corp.
“In reality, demand hasn’t decreased for us right now,” the CEO said.
Reed Stevenson and Yuki Furukawa, Bloomberg News
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