Panasonic reduces production of electric vehicle batteries

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【Summary】Panasonic is decreasing its production of EV batteries in Japan due to a decrease in consumer demand. The company's overall sales of EV batteries increased slightly, but consumer sales in Japan decreased. Panasonic attributes the majority of its sales to US customers who benefit from tax credits for EVs. The company also noted that the fixed costs of production have increased, possibly due to a shortage of critical minerals.

FutureCar Staff Oct 30, 2023 4:25 PM 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), consumer sales of EV batteries decreased in Japan.

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

Despite rising costs and fluctuating 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 also states that battery-powered EVs are the most important and effective "levers" for policymakers in the movement towards lower CO2 emissions. As several countries, including Sweden and the UK, have already announced plans to ban petrol and diesel vehicles by 2030, more governments worldwide are expected to phase out combustion-powered vehicles.

Despite the current decline in consumer demand, GlobalData forecasts that EV production will reach 24 million units by 2028, accounting for 22% of the total light vehicle market. In 2021, production of EV batteries more than doubled to 4.55 million units globally, despite the decrease in vehicle purchases during the COVID-19 pandemic in 2020 and 2021.

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