Panasonic reduces production of electric vehicle batteries

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【Summary】Panasonic is reducing its production of electric vehicle (EV) batteries in Japan due to a decline in consumer demand. The company's overall sales of EV batteries increased slightly, but consumer sales in Japan decreased. The majority of Panasonic's sales are to US customers, attributed to tax credits for EVs. The company also noted increased production costs and a potential shortage of critical minerals used in EV battery production.

FutureCar Staff Oct 30, 2023 9:26 AM PT

Panasonic reduces production of electric vehicle batteries

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 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 seem to be to US customers, which the company attributes 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 fluctuating consumer demand, company filings do not seem to reflect the 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.

With several countries, such as Sweden and the UK, planning to ban petrol and diesel vehicles by 2030, the movement towards lower CO2 emissions is gaining momentum. GlobalData states that battery-powered EVs are the most important and effective solution for policymakers in achieving this goal. Production of EV batteries more than doubled in 2021, reaching 4.55 million units globally, despite the decline in vehicle purchases during the COVID-19 pandemic.

Although consumer demand may have declined temporarily, GlobalData forecasts that EV production will reach 24 million units by 2028, accounting for 22% of the total light vehicle market. These predictions demonstrate the continued growth potential of the EV industry.

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