Tesla Battery Monopoly, Panasonic Faces Test

Panasonic’s car battery business is facing a test.The reason is that although the consolidated financial report for April-December 2019 released on February 3rd shows that the business revenue of this business increased by 13% year-on-year, the world’s largest automotive battery company China Ningde Times New Energy Technology. On the same day, it was announced that it will supply batteries to Tesla, an American pure electric vehicle (EV) company with a honeymoon relationship with Panasonic. Within China, Panasonic’s exclusive supply rights will be lost.

Panasonic’s automotive battery business had operating income of 350.9 billion yen. The company’s chief financial officer (CFO), managing director Bohe Umeda, and Tesla’s battery business said that “the third quarter has begun to get rid of losses. It will help stabilize profitability.” It appears to be profitable on a monthly basis.

Indeed, Tesla’s performance is outstanding. At the end of January, the company announced that its net profit from October to December 2019 was profitable for two consecutive quarters. In fiscal year 2019 (as of December 2019), sales for the full year increased by 50% year-on-year to approximately 370,000 units, giving the impression of rapid growth. The reason is the strong sales momentum of the new model “Model 3”, which has experienced many setbacks in mass production.

In terms of the company’s freely available funds, ie, Free Cash Flow, Tesla reached $ 1,013 million in October-December 2019, increasing to 2.7 times from July to September. The company’s chief executive officer (CEO) Elon Musk said, “I said a few years ago that the average Tesla growth rate would be more than 50%. This belief is still being maintained.

Tesla’s improved performance is good news for Panasonic, which is plagued by declining profitability. Panasonic supplies Tesla with batteries produced at its Nevada and Osaka Prefecture plants. It has invested at least 200 billion yen in the construction of a US battery plant jointly operated with Tesla, and has high hopes for future return on investment.

However, Panasonic’s battery business is now facing new challenges. Ningde Times recently announced cooperation with Tesla on battery supply.

 

 

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 Panasonic's car battery business is facing a test.

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