Panasonic expects its battery business supplying Tesla to be profitable this fiscal year, Reuters reports, and the company has raised its operating profit forecast for the year by over half.
The company announced in October that it was developing the new battery cell that Tesla announced on Battery Day — the 4680 cells — and this will help Tesla cut its battery costs while ramping up battery production by 2030.
On the conference call, Panasonic’s Chief Financial Officer, Hirokazu Umeda, said, “From the next business year we want to end the question of whether (the Tesla) business will be profitable or not.” Panasonic is also adding a new production line at Giga Sparks and wants to build a lithium-ion battery business in Norway as well.
Panasonic said that it was benefiting from the pandemic-driven buying of home appliances and sales of 5G equipment, yet these were offset by weakness in businesses such as in-flight entertainment systems. Its new forecast is 230 billion yen, or $2.2 billion, for the year to the end of March, 22% below the previous year. More than one-third of that profit will probably come from the sales of appliances.
Nikkei Asia noted that Panasonic’s automotive division posted an operating loss of 7.4 billion yen for the three quarters through December, which is at last better than the previous year’s loss of 29.2 billion yen. The article pointed out that the batteries Panasonic makes at Giga Nevada are central to this business. Umeda told reporters that “Tesla operations are at a situation in which we can foresee a full-year profit.”
Panasonic released its consolidated financial results for the third quarter and nine months ending on December 31, 2020. In that report, Panasonic noted that its operating profits decreased by 6% to 226.8 billion yen from a year ago and that this was due mostly to the impact of decreased sales, and despite profitability improvement efforts in the automotive business.
For its automotive solutions, Panasonic noted a 14% decrease in sales from a year ago and cited the decline in demand that followed the temporary closure of its customers’ factories during the first half of last year.
Last month, it was announced that Panasonic would begin producing prototypes of Tesla’s new tabless 4680 battery cells sometime this year. Tesla confirmed that the new battery cells would be produced by Panasonic even though Tesla plans to make some battery cells itself.
Some in the battery industry think Tesla could face its own production challenges and that Panasonic may seek out a future partnership expansion to take on some of the load.
Last March, Panasonic had $4.57 billion in sales from its automotive battery business and Tesla was its main customer. You can read more about that here.