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