Panasonic Reduces Battery Profit Forecast, Cautions On Premium EV Sales

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Panasonic has revised its annual operating profit prediction for the energy division that produces batteries for Tesla and other car manufacturers, reducing it from 135 billion yen to 115 billion yen (USD 769 million).

Panasonic Holdings, a supplier to Tesla, announced on Monday a reduction in its automotive battery production in Japan for the September quarter. This move comes along with a 15% decrease in the division’s annual profit forecast, highlighting a worldwide deceleration in EV sales.

This subdued projection for Panasonic’s battery sector aligns with similar concerns expressed by various automakers and suppliers. This is as significant markets like China and Europe experience diminished growth. Panasonic has revised its annual operating profit estimate for the energy division, which manufactures batteries for Tesla and other car companies, from 135 billion yen down to 115 billion yen (USD 769 million).

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To address the swift decline in demand, the company modified its automotive battery production in Japan during the three months ending in September. This adjustment aimed to maintain an optimal inventory level, as mentioned in the presentation materials available on Panasonic’s website.

The company’s chief financial officer will present the second-quarter earnings at 0900 GMT on Monday. The reduced demand for high-end EVs in North America impacted the battery unit’s production in Japan. This shift in demand was influenced by the U.S. Inflation Reduction Act, which altered consumer preferences. However, Panasonic’s North American operations maintained consistent production levels, with robust sales for vehicles qualifying for tax credits.

Recently, South Korean battery company LG Energy Solution predicted a deceleration in revenue growth for 2024. This is attributed to global economic uncertainties that could potentially dampen the EV sales outlook.

Earlier this month, Tesla’s CEO, Elon Musk, expressed reservations about expanding EV production capacity. He voiced concerns that increased borrowing costs might deter potential buyers, even if Tesla reduced its prices.

Similarly, General Motors is delaying the introduction of several EV models to reduce expenses and is also curtailing spending on EV products.

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