Panasonic slows battery production amid weaker EV business, but Tesla looks good

Panasonic announced that it is slowing down its battery production amid weaker demand for electric vehicles, but it hints at demand from Tesla still being good.

The Japanese electronics giant is Tesla’s longest-standing battery cell supplier.

It produces battery cells for electric vehicles in several factories in Japan, China, and in the US, where it also partners with Tesla to produce cells for Model 3 and Model Y vehicles at Gigafactory Nevada.

With the release of its earnings today, Panasonic announced that it was slowing down its battery production in Japan amid lower demand (via Reuters):

Panasonic Holdings, which supplies Tesla, said on Monday it had cut automotive battery production in Japan in the September quarter and shrank the division’s annual profit forecast by 15%, underscoring a global slowdown in EV sales.

The company said that it lowered production to achieve an “appropriate inventory level, in response to rapidly-reduced demand”.

The good news is that it only reduced production in Japan for global customers.

In the US, Panasonic says that demand remains steady:

Panasonic added its production at its North American operations remained steady, and it saw firm sales of vehicles eligible for tax credits.

The company didn’t elaborate on which customers contributed to the slowdown in demand and which didn’t.

While production has temporarily slowed, Panasonic noted that batteries for electric vehicles are still an investment priority for the company.

City Dwellers’s Take

It sounds like Panasonic is only lightly applying the brakes temporarily, as macroeconomics issues have slowed down EV demand and new car purchases in general.

Considering that the vast majority of the company’s production in North America comes from its Gigafactory Nevada operations, and that’s apparently still going strong, it is a good sign for Tesla.

It looks like Tesla doesn’t plan to slow down Model 3 and Model Y production in North America anytime soon or its battery orders to Panasonic would have slowed down.