Panasonic cuts battery unit’s profit outlook, warns on high-end EV sales

TOKYO, Oct 30 (Reuters) – Panasonic Holdings (6752.T), which supplies Tesla (TSLA.O), 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’s less positive outlook for its battery segment follows similar warnings by several automakers and suppliers, as major economies, including China and Europe, see weaker growth.

“Since these are luxury cars that exceed this price, demand has fallen,” Umeda told analysts and reporters during a briefing on the company’s second-quarter financial results.

Panasonic lowered its full-year operating profit forecast for the energy unit that makes batteries for Tesla and other manufacturers to 115 billion yen ($769 million) from 135 billion yen on an adjusted basis.

The company was running its inventories based on the strong demand it had seen in the first quarter. “We were working to optimise inventories while closing lines, rather than completely shutting down (operations),” said Umeda.

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

South Korean battery firm LG Energy Solution (373220.KS) last week warned of slowing revenue growth in 2024 due to global economic uncertainties affecting the outlook for EV sales.

Also this month, Tesla took a cautious stance on expanding EV production capacity, with CEO Elon Musk saying he was worried higher borrowing costs would make its vehicles less affordable for potential customers despite price cuts.

Tesla in September cut prices of Model S and Model X vehicles in the United States so that some versions qualified for government tax credits.

General Motors (GM.N) is also slowing the launch of several EV models to cut their costs, and pulling back on EV product spending.

($1 = 149.5400 yen)