Panasonic reduces electric vehicle battery manufacturing due to declining demand.

author: FutureCar Staff    

Panasonic Holdings has announced that it will decrease its Japanese production of EV (electric vehicle) batteries after experiencing a significant downturn in consumer demand. The news was announced alongside Panasonic's financial reporting on October 30th. While Panasonic's overall sales of EV batteries increased by 1% to 476 billion Yen ($3 billion), the company's consumer sales of EV batteries decreased in Japan.

The majority of Panasonic's sales appear to be to US customers, which the company credits to the tax credit available for EVs from the US Inflation Reduction Act. However, Panasonic stated that consumer demand for high-end EVs remains low. The company also noted that the fixed costs of EV battery production have increased significantly, possibly due to the scarcity of critical minerals needed for EV battery production. South Korea recently announced a shortage of graphite, used in EV battery anodes, due to updated China import controls.

Despite rising costs and fickle consumer demand, company filings do not reflect a downturn in EV interest among customers. According to research analyst company GlobalData's company filings database, mentions of geopolitics, critical minerals, and the transition to green energy have been steadily increasing since 2018.

GlobalData states that several countries, including Sweden and the UK, have already announced plans to ban all petrol and diesel vehicles by 2030. As such legislation becomes more imminent, more governments worldwide are expected to phase out combustion-powered vehicles. In the movement towards lower CO2 emissions, GlobalData emphasizes that battery-powered EVs are the most important and effective "levers" for policymakers.

Despite the decline in vehicle purchases during 2020 and 2021 due to the COVID-19 pandemic, production of EV batteries more than doubled in 2021, reaching 4.55 million units globally, according to GlobalData. While consumer demand may have dwindled for now, GlobalData still forecasts that EV production will reach 24 million units by 2028, accounting for 22% of the total light vehicle market.

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FutureCar Staff