Panasonic’s joint venture with Tesla makes first profit after $1.6 billion bet

Panasonic’s battery joint venture with Tesla barely managed to post quarterly profits for the first time, a relief to the Japanese company that has so far failed to place a $1.6bn bet on the US electric car pioneer. Hirokazu Umeda, Panasonic’s chief financial officer, said losses at the company’s Nevada-based battery plant with Tesla had been made up because rising production had reduced raw material costs.

Panasonic's joint venture with Tesla makes first profit after $1.6 billion bet

“By next year, we hope that profits will stabilize,” Mr Mei said at a news conference on Monday. The improvement in the company’s business performance echoes Tesla’s strong results last week. Tesla posted its first consecutive two-quarter net profit as the group prepares to ramp up production of its new cross-border utility model.

The shift comes at a critical time for Panasonic. Earlier, Chinese battery maker Ningde Times confirmed on Monday that it had signed a supply agreement with Tesla. After investing $5 billion in a “super factory” in the United States, Panasonic became the sole supplier of lithium-ion batteries for Tesla Model 3 cars.

Overall, Panasonic’s third-quarter operating profit rose 2.9 per cent year-on-year to Y10.4bn ($925m), while strong results from the company’s joint venture with Tesla helped offset a drop in factory automation sensors and capacitors in China. The Nevada-based superplant has struggled to increase production since it started production in 2017, and relations between the two sides have deteriorated.

Elon Musk, Tesla’s chief executive, has previously accused Panasonic of restricting production of the Model 3.

People familiar with the matter said Panasonic’s disappointment with Tesla was partly due to a mismatch between tesla sales and Musk’s aggressive plans to build new plants in China and Germany.

Another serious problem facing the joint venture is the shortage of battery engineers across the industry. The company said the issue was resolved in December.

Panasonic is not involved in Tesla’s new battery plant in China, and Mr. Meeda stressed that the Japanese company will remain focused on the demand for model 3 and Model Y at its Nevada superplant.

He said Panasonic was “not too worried” about losing its exclusivity after Tesla signed an agreement with South Korea’s LG Chem and China’s Ningde era.