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Panasonic’s 60% cut in Japan EV battery production sounds alarm on demand

Over 80% of Panasonic’s EV battery production is supplied to Tesla

Panasonic said on Monday it slowed down electric vehicle battery production in Japan by 60% during the September quarter compared to Q2 to normalize inventory levels.

The Osaka-based company also lowered its battery division’s annual profit forecast by 15% to $769 million citing unfavorable demand conditions.

Panasonic is the world’s fourth largest EV cell supplier based on battery capacity deployed in newly-sold EVs through the first eight months of 2023 data from the Adamas Intelligence EV Battery Capacity and Battery Metals Tracker shows.

More than 80% of Panasonic’s EV battery production is supplied to Tesla in a longstanding business relationship. The news sent Tesla stock trading in New York down 5% on the day.

The remainder is split between Japanese automakers Toyota, Mazda, Honda and others, Adamas data shows. Panasonic has captured 9% of the global market delivering 35.2 GWh of EV battery power year-to-date.Panasonic’s 60% cut in Japan EV battery production sounds alarm on demand

Cybertruck faces “enormous” production challenges

Third quarter financial results released earlier this month from Tesla, which sourced a third of its battery capacity from Panasonic this year (down from 39% in 2022), also came in below expectations.

CEO Elon Musk said the company is now focusing on cost-cutting and keeping prices low for car buyers struggling with high interest rates.

Musk also said the company faces “enormous challenges” to match production with demand for its much-anticipated new Cybertruck.

Tesla will be using its own 4680 cells manufactured at its Austin, Texas facility to power the Cybertruck, which according to Musk has more than one million pre-orders. Deliveries of the futuristic truck start at the end of November.

Tesla’s main supplier is China’s CATL which produced 35% of the power-hours in the EV pioneer’s four models sold so far in 2023 while LG Energy Solution makes up 26%.

Tesla’s own cells power Model Y’s sold in the US and overall 4680s are responsible for 6% of the company’s battery capacity deployed year-to-date according to Adamas Intelligence data.

Adamas take:

Panasonic’s headwinds follow similar news from Korea’s LG Energy Solution last week when the world’s number two cell supplier to the global EV industry warned of slowing revenue growth on lowered EV sales projections. While signs of a challenging environment for cell suppliers are mounting, Adamas expects global deployment to exceed 200 GWh in Q4 2023 for the first time ever, pushing the annual total to over 700 GWh, >45% higher than in 2022.

EV, Battery and Battery Materials Market Intelligence:

EV Battery Capacity and Battery Metals Tracker

Building on ongoing EV registrations in over 110 countries, our web-based platform helps users track monthly deployment of battery metals and materials, battery capacity, and the ever-evolving competitive landscapes of battery chemistries and cell suppliers.

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The ‘EV Battery Capacity Monthly’ is a subscription-based report for tracking monthly deployment of passenger EV battery capacity by EV type, region, country, make, model, cell supplier and cell chemistry on an ongoing basis.

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