Panasonic Plans to Significantly Increase Profits Due to Tesla Battery Business

Photo: Business Wire

Panasonic announced that it expects operating profit to grow by nearly a third in the current fiscal year as the economic recovery from the effects of coronavirus is bringing back demand for equipment and components. Demand for car batteries used by Tesla is also growing steadily, with Panasonic's share of profits from the car manufacturer now standing at nearly 40%.

Panasonic aims to meet the growing demand for electric vehicle batteries through a partnership with Tesla that has started to generate solid profits. Panasonic expects its automotive division to generate operating income of ¥50 billion this fiscal year, said the company’s CFO Hirokazu Umeda, Reuters reported. “The automotive batteries, which are nearly all Tesla account for around 40%,” he said. Panasonic predicts that the company's total operating income will grow 27.6% to ¥330 billion ($3 billion).

Panasonic is also set to launch a test line in Japan this fiscal year to produce the new 4680 battery cells that Tesla unveiled during September 2020, Umeda confirmed.

For the quarter ending March 31, Panasonic posted an operating income of ¥31.8 billion ($292.09 million), down 40% from a year ago. This reflected weak profits from its life solutions unit, which sells lighting, equipment, and materials for buildings. The electric vehicle battery business has largely offset the growth in revenue and the overall result was significantly better than the estimated average profit of ¥20.99 billion from five analysts surveyed by Refinitiv.

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