Tesla Battery Biz Boosts Panasonic’s Earnings

FEB 4 2019 BY MARK KANE 15

Panasonic finally earns money on batteries, some other areas disappoint though.

Panasonic announced financial results for Q4 2018 (Japanese FY Q3). The company as a whole encountered some obstacles (we saw it already in previous quarter). The operating profit decreased by 19% to 97.6 billion JPY ($887 million) and net profits decreased by 26% to 60.1 billion JPY ($546 million).

However, in the case of the lithium-ion battery business for automotive applications, it’s getting better. Sales of batteries are increasing and Panasonic intends to be ready for 35 GWh cell production at the Tesla Gigafactory by the end of March 2019.

Panasonic results – Q4’2018 (Japanese FY 2018-Q3)

The operating profit from Energy segment increased by 13% during the Q4 to 16.5 billion JPY ($150 million), which is really not bad – almost 17% of total operating profit of the company (at less than 10% share in sales).

Panasonic explains:

Sales:Significant increase in automotive batteries, mainly in cylindrical types.

OP: Increased overall due mainly to fixed-cost control initiatives and operational improvement throughout Energy, in addition to revised provision for legal expenses, despite ramp-up expenses for automotive battery factory in North America.

The forecast’s revision clearly indicates that Panasonic expected to be able to sell more batteries. Here are interesting insights about the battery business:

Source: Panasonic

Categories: Tesla

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15 Comments on "Tesla Battery Biz Boosts Panasonic’s Earnings"

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It looks like Tesla is still dragging them down… “Production at automotive battery factory in North America is pushed back”, “Delay in improving operational losses at automotive battery factory in North America” and a challenge of “stable utilization at automotive battery factory in North America.” With an operating loss of 4 billion yen on their automotive battery side.

Read the “Segment Information” slide more carefully.

Automotive batteries are under their Energy business (16.5 billion yen profit, up 13 billion yen YoY), not their Automotive business (4 billion yen loss).

Looks like their battery business is doing pretty well.

Okay, got it, so Automotive is not batteries, but other electronics. However, it doesn’t explain the negative comments about the Tesla GF they have which I quoted above, but my comment of operating loss on automotive is not valid (as it is on energy side).

Either way, they will really be rolling in the money the next few years with the volumes they will be running for Tesla cars.

It’s less a case of dragging them down than of lifting them up more slowly than expected.

“With an operating loss of 4 billion yen ”

As Ryan notes, Tesla is in the AIS/Energy segment, which had 5.8b Yen operating profit.

I wonder if there is enough information to get an estimate of the cell cost per kWh Panasonic is charging Tesla.

Delete my comment, their figure is only for Q3, so my numbers didn’t make any sense for full year, no idea what Tesla paid…

With Tesla’s car production during Q4 being little if any greater than Q3 production, there would have been much less need for Panasonic to ramp up its production capacity. Thus I would think Panasonic had a much better chance of making a profit in Q4 than in Q3, when Tesla was still increasing its production — and its demand for batteries — at a rapid rate.

I was shocked to read, some months back, that Panasonic had yet to make an overall profit on selling Tesla batteries from the Gigafactory. Tesla is Panasonic’s #1 customer for battery cells, and even with the costs for installing production lines, hiring and training workers for the Gigafactory, and ramping up production, I expected that Panasonic was making at least some profit on the deal. Hopefully they are now!

Yeah, I’m not surprised they were not making a profit on the Gigafactory yet a few months ago. After-all the volume of batteries produced there was slow to reach the 5000 cars/week level that was initially promised. So Panasonic had this huge investment in the plant but sales that were no where near projections up until the last half of last year.

All of the batteries that Panasonic makes for the Model S and X are manufactured in Japan, so those weren’t helping Gigafactory profits at all.

There is not enough info to calculate $/kWh.

AIS/Energy, which includes Tesla, did 190b Yen last quarter (Panasonics Q3, ended 12/31/18). They forecast 193b Yen for the current quarter. Three months ago they forecast 456b Yen for the two quarters together, so that’s a whopping 16% decrease almost overnight.

The 73b decrease in expectation is roughly:
18b – cylindrical (Tesla)
7b – prismatic
13b – small size
35b – other

It’s clear this business division is a lot more than just Tesla. Look at the revenue ramp over the past couple years I’d guess Tesla was ~100b Yen of the 190b Yen last quarter. There’s a huge error band on that guess, but FWIW it would be about $140/kWh assuming 6.4 GWh sold.

Good!

The EV biz won’t be real unless companies can make a profit.

Looks like they are at Tesla’s mercy. Doesn’t look good for investors when growth depends solely on Tesla.

If I’m Panasonic, I’m looking for other EV makers, just to diversify.

When you have Tesla cranking out volumes of EVs that other manufacturers are nowhere near matching, and Tesla has very rapid expansion plans, Panasonic should be doing everything they can to maintain and boost that partnership.

Sure, add other automakers if possible, but being tied tightly to Tesla during this phenomenal growth period is a very good thing for Panasonic, IMO.

Don’t forget that Panasonic is Toyota’s partner for hybrid and plug-in batteries as well, which is also a big business with big growth opportunity.

Tesla did 245k EVs last year. BYD claims 247k, including 20k of buses, trucks, etc.

And your point is?

BYD aren’t going to partner with Panasonic. As BYD is its own battery manufacturer.

But yes Panasonic has been looking to supply other auto manufacturers.

The faster Panasonic can help Tesla grow the faster the BEV market will grow overall, which is also good for Panasonic and future sales to other companies.