Panasonic reduces production of electric vehicle batteries

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【Summary】Panasonic is cutting production of EV batteries in Japan due to a decrease in consumer demand. Despite an overall increase in sales of EV batteries, the company's consumer sales in Japan have declined. The majority of Panasonic's sales come from the US, where tax credits for EVs are available. However, consumer demand for high-end EVs remains low. Rising production costs and a shortage of critical minerals needed for battery production are also factors.

FutureCar Staff Oct 30, 2023 6:21 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 the company's overall sales of EV batteries increased by 1% to 476 billion Yen ($3 billion), its consumer sales of EV batteries decreased in Japan.

The majority of Panasonic's sales appear 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 significantly increased, possibly due to the scarcity of critical minerals needed in EV battery production. South Korea recently announced a shortage of graphite, used in EV battery anodes, due to updated China import controls.

Company filings do not seem to reflect the downturn in EV interest among customers. Research analyst company GlobalData's company filings database shows that mentions of geopolitics, critical minerals, and the transition to green energy have been steadily increasing since 2018.

The movement towards lower CO2 emissions has led several countries, including Sweden and the UK, to announce 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. GlobalData states that battery-powered EVs are the most important and effective "levers" for policymakers in achieving lower CO2 emissions.

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 temporarily dwindled, 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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