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Panasonic’s decision not to expand battery production capacity has been validated by slower global demand for electric vehicles.
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The company is preparing to start production at a second US-based factory in Kansas, but has frozen plans for a third plant, and may benefit from having US factories as Tesla and others seek to reduce reliance on Chinese battery makers.
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Panasonic is undergoing a broader overhaul, committing to cut 10,000 jobs to eliminate non-growth operations and boost profitability, and focusing on energy storage, data-center power, and AI-driven process automation.
Panasonic Holdings Corp.’s decision not to rush into expanding capacity to build batteries has been validated by slower global demand for electric vehicles, Chief Executive Officer Yuki Kusumi said.
The supplier of lithium-ion batteries to Tesla Inc. is getting ready to start production at a second US-based factory in Kansas, but has frozen plans for a third plant. Panasonic has been making batteries in Nevada since 2017, helping the carmaker ramp up volume sales for Tesla’s Model 3 and Model Y cars.
Panasonic may also be poised to benefit from having factories in the US as Tesla and others seek to reduce their reliance on Chinese battery makers, because of the tariffs being imposed on items imported into the US and incentives provided under the Inflation Reduction Act. While Honda Motor Co., Hyundai Motor Co. and others are expanding battery production in the US, Panasonic is well ahead of its rivals.
At the same time, Kusumi is seeking to execute a broader overhaul of the century-old Osaka-based company, which committed last week to cutting 10,000, or more than 4%, of its workforce to eliminate non-growth operations and boost profitability. The goal is to focus more on energy storage, data-center power and AI-driven process automation, while building on its EV battery and home appliance businesses.
“The talk of a third factory was based on anticipation of large-scale EV adoption but I doubted we’d see a quick transition, especially in the US, because of issues such as charging infrastructure, battery cost and reliability,” Kusumi said in a group interview. “As things stand now, I’m relieved we didn’t move forward with securing a location for a third factory.”
Slower uptake of EVs, at least in markets outside China, have forced carmakers and suppliers to scale back their expansion plans.
In December, Panasonic said it had turned down almost $700 million in state incentives to build a manufacturing site in Oklahoma.
Nissan Motor Co. recently scrapped plans to build a battery plant in Fukuoka, Japan, to redirect cash and resources toward a new turnaround plan.
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