Panasonic Holdings (6752.T), a supplier to Tesla, announced on Monday that it had reduced its automotive battery production in Japan during the third quarter of September. Additionally, it lowered the division’s annual profit projection by 15%, highlighting the worldwide decline in electric vehicle (EV) sales.
This less optimistic outlook for the battery segment aligns with cautionary statements made by various automakers and suppliers. It reflects the subdued growth in significant economies like China and Europe.
Panasonic has revised down its annual operating profit forecast for its energy division, responsible for manufacturing batteries used by Tesla and other car manufacturers. The new forecast is 115 billion yen ($769 million), down from the previous projection of 135 billion yen. The adjustment in its battery production in Japan for the three months ending in September was made to maintain a suitable inventory level in response to a significant decrease in demand, as stated in presentation materials available on its website.
Panasonic’s group chief financial officer is scheduled to conduct a briefing on the financial results for the second quarter starting at 0900 GMT on Monday.
According to the presentation materials, Panasonic noted that the production of the battery unit in Japan was affected by a decrease in the adoption of high-end electric vehicles (EVs) in North America. This was attributed to changes in consumer demand prompted by the U.S. Inflation Reduction Act.
Panasonic further mentioned that its production in North American facilities remained consistent, and it experienced robust sales of vehicles that qualified for tax credits.
Last week, LG Energy Solution, a South Korean battery company, expressed concerns about a slowdown in revenue growth in 2024. They attributed this to global economic uncertainties, which were impacting the outlook for electric vehicle (EV) sales.
In addition, Tesla, earlier this month, adopted a cautious approach to expanding its EV production capacity. CEO Elon Musk expressed worries that higher borrowing costs might make it challenging for potential customers to afford their vehicles, despite reducing prices.
Furthermore, General Motors (GM) is also delaying the introduction of several EV models in an effort to reduce costs and is scaling back its spending on EV products.
(At an exchange rate of $1 to 149.5400 yen)
Reported by Daniel Leussink; Edited by Kim Coghill and Miral Fahmy