Panasonic: Growth in the U.S. Electric Vehicle Market has slowed more than expected

Source: Gasgoo

Japanese company Panasonic Holdings said on May 18 that its electric vehicle battery unit is likely to miss its initial profit target due to a sharper than expected slowdown in the North American electric vehicle market.

 

“We have seen an unexpected and sharp drop in demand for products that we manufacture in Japan and ship to our strategic partners,” said Panasonic President and chief executive Yuki Kusumi. Kusumi is widely believed to be referring to Panasonic’s largest electric vehicle battery customer, the US electric car manufacturer Tesla.

 

The product in question for demand could be the older 1865 battery that Panasonic makes in Japan and ships to the United States, which is used in Tesla’s Model X and Model S vehicles, which analysts believe face sluggish sales due to relatively high prices and an overall slowdown in the electric vehicle market. Panasonic has already announced it will reduce production of such batteries in Japan.

 

Image source: Panasonic

Panasonic Energy, the unit responsible for the battery business, is likely to miss its target of a 12 per cent return on invested capital in the fiscal year ending March 2025. Despite the subsidies from the U.S. government, the latest forecast for Panasonic’s battery business unit is still 9.1 percent.

 

Kusumi hinted at Panasonic’s slow response to Tesla’s change in strategy, saying: “I would say we failed to pay attention to the real intentions of our customers.”

 

Panasonic’s other businesses, including heat pump systems, also fell short of the company’s expectations. Kusumi stressed that Panasonic will step up its management of under-performing businesses and that the company will “strictly manage the competitiveness of each business in terms of growth and return on invested capital.”

 

Although Panasonic posted a record net profit of Y443bn ($2.8bn) in the year to March, it is likely to miss its main target of a 10 per cent return on equity and a cumulative operating profit of Y1.5tn by March 2025.

 

Panasonic has decided to sell its auto parts subsidiary to a US asset manager as part of its efforts to overhaul its broad business portfolio. Kusumi also gave examples of other businesses where the company is currently facing challenges, including televisions and factory automation products located in China.

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