Panasonic reported its first quarterly loss in automotive batteries, attributing the downturn to diminished demand for Tesla’s high-end Model S and Model X vehicles. The announcement was made by Panasonic’s Chief Financial Officer, Hirokazu Umeda, during an earnings call on Monday.
The loss comes as consumer preference has increasingly shifted towards Tesla models priced below the $80,000 threshold, which qualify for tax incentives. This change in consumer behavior has had a direct impact on Panasonic’s profitability for the September quarter, reports Bloomberg.
In response to the reduced demand, Panasonic cut its domestic production of automotive batteries by 60%. Umeda indicated that although this has helped stabilize inventory levels, the factories won’t be running at full capacity “any time soon.”
The shift in consumer preference towards lower-priced Tesla models also comes as Elon Musk’s company is recalibrating its expansion plans. The automaker has been reducing prices, which has eaten into its profit margins. This, in turn, has had a ripple effect on Panasonic’s battery business.
Despite the anticipated rise in electric vehicle (EV) battery demand in North America, Panasonic has lowered its full-year operating income forecast to ¥400 billion ($2.7 billion), missing analysts’ expectations of ¥414 billion.
Umeda concluded by stating that while a recovery is expected, the kind of growth seen in the U.S. market should not be assumed for Panasonic’s domestic market. Despite the challenges, Panasonic remains committed to its long-term plans, including the mass production of its new 4680 batteries for Tesla.
