Panasonic Reduces Profit Forecast As Investment In Tesla Gigafactory Explodes Ahead Of Model 3


Tesla Model X on the Panasonic show stand

Tesla Model X on the Panasonic show stand

There’s good news and then there’s bad news.

Let’s start with the bad…Panasonic has announced that its profit forecast for the year will be reduced. This of course will hurt the battery maker in the short term, but the long-range outlook is promising.

Tesla Model 3

Tesla Model 3

The good news…Panasonic’s profits will be reduced this year due to the battery maker’s massive investment in battery cell production, largely at the Tesla/Panasonic Gigfactory.

Per Reuters:

“Japan’s Panasonic Corp on Monday said it has cut its annual profit forecast after bringing forward some of its investment in a battery plant for U.S. electric vehicle maker Tesla Motors Inc in anticipation of strong EV demand.”

Those investments at the Gigfactory will be up to 1.6 billion for Panasonic.

Panasonic CEO Kazuhiro Tsuga stated:

“We are seeing strong demand for EV (batteries) not just from Tesla but various other automakers. We see the rechargeable battery business as the biggest growth driver. So we are aggressively making upfront and strategic investment here.”

So, profits this year (and next year too, according to Panasonic) will be down as investments continue to go up. Those investments are necessary for the upcoming Model 3, says Panasonic, because without the additional spending to increase production “demand would soon exceed our production capacity if Tesla’s sales go smoothly,” Tsuga stated.

Source: Reuters

Categories: Battery Tech, Tesla

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22 Comments on "Panasonic Reduces Profit Forecast As Investment In Tesla Gigafactory Explodes Ahead Of Model 3"

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The miniature Tesla in the right edge of that rendered image is amusing. Someone forgot to delete that option during editing.

That’s the Model 3 mini edition. A steal at $9,999!

That’s not a rendered image, but a photo during the Tesla/Solarcity presentation on their new solar roofs. You can see it at minute 12:03 in the presentation linked below.

The presentation can be found here:

The “Toy” version of the model S can be found here:

It’s a no brainer, all EV parts suppliers should be doing the same as Panasonic. The electric (vehicle) age is upon us and everyone should be preparing for it, I am!

But if you have brains, you will ignore the hype. When people realize that most power generation has switched to natural gas, owned by the OIL COMPANIES by the way, and that now they get to charge EVERYONE more for electricity because of the demand from EVs instead of just people that drive gassers, the market won’t hit 5 percent.
That won’t be enough to justify the large scale investment that you dream of….

Can’t they charge you more for that electricity either way?

“hat now they get to charge EVERYONE more for electricity because of the demand from EVs instead of just people that drive gassers, the market won’t hit 5 percent.”

The good thing is that now you can free yourself from oil company on both your homes and your transportation if you want to with installing solar panels on your roof.

Before switching, you are slaves to fossil fuel company with both electricity generation and your car. Now, you at least have a choice!

I can’t see anyone who refuses the “freedom”, especially on election day!

(shhhh.. I was trying to let him/her connect the dots)

It’s a paid fossil fuel troll. They don’t connect dots– unless it’s deposits in their bank accounts.

Why is the power grid slowing shifting towards renewable energy in the US? Doesn’t that mean EVs get cleaner every year?

Nobsartist said:

“When people realize that most power generation has switched to natural gas, owned by the OIL COMPANIES… the market won’t hit 5 percent.”

So, your argument is that people would rather continue to pay oil companies directly for 100% of the fuel for their gasmobiles, at the rate of about 10¢ per mile, than to pay about 2-5¢ per mile to various electricity providers, because Big Oil & Gas provides a national average of 33% of the fuel for that power… but a lower percentage in States where EV sales are highest.

This is what passes for “logic” among EV bashers. 🙄

Thank you, Stash, I assume you are smoking Hash.

Musk explained how gas plants convert their energy into electricity, at a high efficiency, compared to your gas barbecue. Remember, through the haze of Hash, Stash, that Musk has a masters degree in power storage, for capacitors.

Its not enough, that Musk has a solar power company that will install a solar roof for free, to lower your electric bill and take power from the sun and not coal fired power plants. Oh yeh, I forgot, you are high on Hash.

I’m driving an EV now and absolutely loving it! (BMW i3). Also have an early deposit on the Tesla 3. Not certain I’ll go for the Tesla. I like the practically of a hatch and riding up high like an SUV.

They are so successful now and growing that they need to put all our profit into investments to keep up with the growth.

That must be one of the greatest “problem” a company could have 😛

Well said! Most manufacturing companies in the world would just love, love, love to have that “problem”. Capitalists and investors call that an opportunity, not a problem!

“….various other automakers”, that’ll be Toyota and Honda then perhaps Ford and Suzuki.

This is fantastic news.

Good news or bad news; as long as it moves the stock up or down, stock market folks are happy to sell short or long.

What a BS hype – investment doesn’t reduce this year’s profit, it is not expense but investment. Investment is amortized over many years and only later depreciation reduces profit.

Oh no!

You better call the accountants at Panasonic and let them know they made a huge mistake!

I’ll bet they’ll thank you for teaching them basic accounting. :-p

Depreciation is recognized on the P&L. Depreciation is typically recognized each year for X years. This reduces profit. It’s also how Trump avoided paying taxes.

Depreciation does not start until the asset is put into service. At that time incremental revenues should more than the depreciation charges.

“Investment in expansion” is more than just materials and machines, though. You must plan, purchase, hire, train, build and otherwise prepare. This requires people whom receive salaries and benefits. Some of these personnel costs can be included as part of the asset, so they don’t show up until revenues do. But some can’t, and sometimes the bookkeeping required to capitalize labor expense is more hassle than it’s worth, so companies don’t do it. That’s why rapid expansion often creates short term losses.

Not one mention of how Panasonic is guaranteed a minimum ROI by Tesla.

That is, no matter what actually happens at the “Gigafactory” in terms of production or with Tesla in terms of sales, Tesla is on the hook for minimum return to Panasonic.

They have assumed 90% of the risk. Bad idea.

Musk may be a fairly bright guy and a marketing hype wiz, but as a CEO he is a complete asshat.