Panasonic To Profit From Tesla Model 3 Battery Cells By Year’s End

3 weeks ago by Eric Loveday 7

Tesla Model X on the Panasonic show stand

In July, Panasonic reported a 16.9% rise to $758.93 million in first-quarter operating profit, but it’s not all gains for the supplier.

Tesla Model 3 (wallpaper 2,560x)

The automotive battery side of Panasonic didn’t fare so well. As The New York Times reports:

“The profit increase comes as Panasonic took control of Spanish automotive mirror manufacturer Ficosa International SA to expand its automotive push, boosting its automotive sales.”

“In the same quarter, in June, Panasonic began battery cell production for Tesla Inc’s mass-market Model 3 electric vehicle at their $5 billion “Gigafactory.”

Panasonic’s financial chief Hirokazu Umeda commented on the financial battery situation as it applies to the Tesla Model 3:

“For battery cells for the Model 3, costs outweighed profit in the first quarter. As production accelerates towards next year, we expect the business to contribute profit.”

This is to be expected though as it requires substantial upfront investment from both Tesla and Panasonic to get the 3 to market. Rewards will come later.

The New York Times concludes:

“Panasonic is reinventing itself as a supplier of automotive batteries, advanced electronics auto parts and energy-saving home systems to escape the price competition of smartphones and lower-margin consumer products.”

“The shift, led by Chief Executive Officer Kazuhiro Tsuga who took the helm of the conglomerate five years ago, was initially not fast enough to offset lost revenue from the declining consumer electronics business.”

“The firm expects a change this year as it starts shipments of advanced electronics devices to major car makers as well as battery cell production for Tesla’s Model 3 in Nevada.”

Model 3 battery cell production will be Panasonic’s primary focus for the next several years as Tesla races to fill a backlog of some 500,000 orders.

Source: The New York Times

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7 responses to "Panasonic To Profit From Tesla Model 3 Battery Cells By Year’s End"

  1. SJC says:

    They will do well over time.

  2. HVACman says:

    “and energy-saving home systems to escape the price competition of smartphones and lower-margin consumer products.”

    In the HVAC industry, Panasonic is jumping with both feet into the exploding high efficiency mini-split heat pump market. They also make what I think are the best residential/light commercial bathroom exhaust fans on the market. They use variable-speed electronically-commutated PM DC motors – similar to EV motors – that are incredibly powerful, quiet and efficient.

  3. Pushmi-Pullyu says:

    If Panasonic can recoup the billions it has supposedly invested in Gigafactory 1 in only a year or even less, then I find that quite surprising. In fact, it makes me wonder if Panasonic wound up investing far less than what Tesla wanted them to.

    1. Rob Stark says:

      Panasonic not talking about recouping billions.

      They are talking about price Tesla pays for the cell being greater than cost to make cell plus depreciation on equipment.

      At first low volume makes that impossible.

      1. Pushmi-Pullyu says:

        Okay, thanks for the correction Rob.

        I treasure my ignorance of financial matters, but sometimes my lack of knowledge on that subject does cause me to reach the wrong conclusion about such things.

        1. Also, stories of GM losing Buckets of Money, on the early Volt, were considering all the investment, divided by the first few cars, rather than the investment pro rated on 2-3 years production, plus the payoff of being allowed to sell high profit pickups in California, because of the Volt Sales there.

          In this case, similarly, they have been investing in manufacturing the battery production equipment, getting it shipped and installed, and getting the line up and running, fir as much as a year or more.

          Storage cells came first, for Tesla Energy, then Model 3 Cell, which seem to have more demand than anticipated for, at the beginning, so Model S & X might not get them, or have a much longer wait!

  4. Jason says:

    You would have to be very native to think that Tesla and Panasonic would not be making a profit on this venture. They would have to really screw up their figures, or a total collapse of the economy for that to happen.
    Make no mistake, Tesla will be making a profit on the base Model 3, and Panasonic will be making a profit on every battery they sell to Tesla.

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