Today Panasonic announced the first quarterly profit in its US battery business with Tesla.
Over the past few years, Tesla has become the world's largest consumer of lithium-ion batteries. In 2014, Tesla announced that it had signed an agreement with Panasonic to create its own battery manufacturer in-house at the Gigafactory, which opened in 2016. Instead of buying Panasonic Japanese-made batteries and shipping them worldwide, the automaker wanted to get batteries that would be produced in the same building where it was planned to build batteries for its first mass-market electric car, Model 3.
Tesla announced its second consecutive quarterly profit last week. Vehicles deliveries reached record levels again, and the company's forecast for 2020 was bold. Tesla said that this year it will comfortably deliver more than half a million units, and that in turn will lead to new highs.
Thanks to the success of Tesla, Panasonic was also able to make a profit. “We are catching up as Tesla is rapidly expanding production,” said Panasonic CFO Hirokazu Umedatold at earnings briefing, referring to battery cell production. “Higher production volume is helping to push down materials costs and erase losses,” he continued.
Panasonic said its operating profit for the 4Q 2019 rose 3% to $915 million, surpassing analysts' estimates. 49% of this profit came from improvements in Tesla’s battery business.
Previously, Panasonic had problems meeting Tesla's needs. The first year of Model 3 production was plagued by the slow pace and inconsistent quality of battery pack production. This led to delays in the high production goals of the California automaker and also pushed Tesla to find other solutions to meet their own demand.
At the end of December 2019, Panasonic announced that it had solved the problem of labor shortages, which hindered production efficiency at the Nevada electric battery factory. It also contributed to making a profit.
Meanwhile, the price of Tesla's stocks is growing very rapidly. At the time of writing, their cost is a record $781.65. Now Tesla's market capitalization is about $141 billion, which means that the American automaker is now more valuable than the traditional German companies VW and BMW combined. Their total value is around $136 billion. More recently, Tesla took the place of VW in the Top 25 of the world's most valuable automakers, and now this threat looms over Toyota.
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Featured image: Mark Kane
About the Author
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.