Photo: Business Wire
Panasonic said it expects its battery business supplying Tesla to be profitable in fiscal 2021. As a result, the company raised its full-year operating profit forecast by more than half.
After making profits over the past four quarters and Tesla's announcements that they will be in dire need of battery cells, Panasonic is increasingly confident that its 10-year partnership with the California-based manufacturer is becoming very profitable.
“From the next business year we want to end the question of whether (the Tesla) business will be profitable or not,” Chief Financial Officer Hirokazu Umeda said on a call. In the previous quarter, Panasonic reported a 30% increase in operating profit to ¥ 130.2 billion, Reuters reports.
Tesla intends to produce 20 million vehicles per year. The company is trying to ramp up car production as quickly as possible. The main limiting factor for this is the production of battery cells. Therefore, Elon Musk called on all Tesla battery suppliers, including Panasonic, to increase the number of cells produced. During the Q4 2020 Earnings Call, Tesla's CEO also said that the reason the company started its own battery cell manufacturing is to accelerate growth.
"So - but the reason Tesla is doing its own cell production is in order to accelerate the growth. It is not to make less use of our cell suppliers. In fact, I want to be really clear, Tesla wants to increase purchases from cell suppliers. And we've been very clear with our cell suppliers, whether it be CATL or Panasonic or LG that we will take as many batteries as they can produce."
This is an inspiring message to Tesla battery suppliers who can be confident that the company will bring them high profits.
In September 2020, Panasonic began retooling its Nevada plant and adding a 14th production line, which will increase the factory capacity by 10% to 39-gigawatt hours per year. In addition, the company announced in October that it was developing a new battery cell developed by Tesla. Panasonic plans to begin test production of the new line for Tesla 4680 batteries starting April 1, 2021, Umeda said.
© 2021, Eva Fox. All rights reserved.
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About the Author
Eva Fox
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.
