Panasonic reported its first-quarter operating profit to be 27 times higher, surpassing expectations, as demand for home appliances and automotive batteries bounced back to life from a particularly weak COVID-hit year.
Panasonic recorded its strongest performance for the first quarter since 2008 as operating profit for April- June rose to a staggering amount of 104.4 billion yen, exceeding market expectations of 68.8 billion yen by nearly 50 percent.
Panasonic benefitted from the increasing demand for electric car batteries, through its long-time partnership with electric car company Tesla. The electronics company has transitioned from low-margin consumer electronics to a higher scope of products, focusing on electric car batteries, industrial-use components, power storage systems, and production machinery.
Panasonic is working closely with pioneer electric car company Tesla to make Tesla’s 4680 battery cells. In September last year, Chief Executive Officer of Tesla, Elon Musk, announced an ambitious plan to produce its battery cells with a new design and manufacturing process. These so-called 4680 battery cells would have higher energy density and would extend ranges of current vehicles, letting Tesla offer a $25,000 car in three years, as it sharpens its technology edge against rivals. After being delayed for some time, Tesla now plans on producing as-yet unfinalized 4680 vehicle models, starting with a small volume this year. To make the batteries, the company is launching a test line in Japan which it claims will halve battery costs and help it ramp up battery production 100-fold by 2030.
The Japanese company has sold all its stake in Tesla for about 400 billion yen ($3.62 billion) to help to pay for the acquisition of U.S. supply chain software company Blue Yonder in a deal worth $7.1 billion. Despite selling all its shares in Tesla, Panasonic said that its supply relationship with Tesla Inc remains strong.
Panasonic is also adding a new production line at the Nevada factory and is looking to build a lithium-ion battery business in Norway to connect with European carmakers and reduce its reliance on the U.S. carmaker. The automotive company shares a battery partnership with Toyota Motor Corp.
Panasonic reaffirmed its full-year forecast of an annual profit of 330 billion yen, slightly lower than analysts’ forecasts of 335.86 billion yen.