Panasonic puts productivity boost ahead of new EV plant in US

Panasonic Holdings

21/01/2024 23:00

By Daniel Leussink and Miho Uranaka
       TOKYO, Jan 22 (Reuters) - Panasonic's  6752.T  battery
business must focus on boosting productivity, Group CEO Yuki
Kusumi told Reuters, signalling the Tesla supplier may hold off
building a third battery plant in North America as demand for
electric vehicles cools.
    The battery unit, Panasonic Energy, had previously said it
aimed to decide on building the factory by the end of March.
    But Panasonic Holdings CEO Yuki Kusumi said in an interview
that a decision would be made only "when the timing is right".
    "I keep telling people we need to think about thoroughly
raising productivity before setting up a third location," he
said on Friday at the company's Tokyo office.
    The comments come amid signs of cooling demand for EVs in
the United States that have prompted some automakers, including
General Motors  GM.N  and Ford  F.N , to scale back production
plans.
    Panasonic Energy has a plant in Nevada and has broken ground
on a second one in Kansas. In December it said Oklahoma - where
it was previously exploring building a factory - was no longer a
candidate site.
    The unit expects the Kansas plant to take its annual auto
battery capacity to 80 gigawatt hours (GWh) a year. It aims to
raise that to 200 GWh by early 2031.
    Kusumi said his main instruction to the energy unit was to
prioritise boosting production volume from its existing
investment over deciding on the site of the third plant. Given
the human resources requirements of a new plant, Kusumi said it
was generally better to have fewer production sites.
    He added there was room to raise production capacity by
improving processes such as machine maintenance and that time
lags due to changing circumstances happen in any business.
    While consumer demand for EVs is growing worldwide, it has
cooled in key markets such as the United States and Europe, and
is not as profitable as industry executives had anticipated. 
    Higher interest rates have pushed many EVs out of reach for
middle-income consumers who are also waiting for cheaper models
now under development.
    Kusumi said Panasonic wanted the energy unit to improve its
manufacturing so that it would generate profits without relying
on the U.S. Inflation Reduction Act, which spurred a wave of
investments in new EV battery plants there.
    The IRA and other U.S. legislation provide incentives aimed
at boosting domestic production of EVs, batteries and raw
materials.

 (Reporting by Daniel Leussink and Miho Uranaka; Editing by
David Dolan and Mark Potter)
 ((daniel.leussink@thomsonreuters.com; Twitter:
@danielleussink;))