Tesla's battery supplier stocks surge on Panasonic's first Gigafactory profit (updated)

Posco Future M

04/02/2020 02:54

(Recast with share prices for other battery suppliers; adds
analyst quotes, LG Chem forecast, context)
    By Makiko Yamazaki and Hyunjoo Jin
    TOKYO/SEOUL, Feb 4 (Reuters) - Shares of Asian companies in
Tesla Inc's  TSLA.O  battery supply chain surged on Tuesday
after Panasonic Corp's  6752.T  report on the first profit at
its battery venture with Tesla boosted investor confidence in
the U.S. electric vehicle (EV) maker.
    Panasonic's first quarterly profit from its $1.6 billion
investment in Tesla's so-called Gigafactory in Nevada gives
another vindication for Tesla founder Elon Musk's bet on EVs
against established automaking heavyweights including General
Motors Co  GM.N .
    "When you look back, say two to three years ago, there were
doubts about whether the EV era would arrive," said analyst Kang
Dong-jin at Hyundai Investment & Securities in Seoul.
    "But now there is more viability about the sector thanks to
Tesla's strong sales and Europe's tougher emissions
regulations," he said.
    Panasonic stock jumped more than 9% in early Tuesday trade
after the Japanese conglomerate the previous day reported its
first quarterly profit at the battery venture.
    The result helped drive Tesla's share price 20% higher
overnight in its largest one-day gain since 2013.  urn:newsml:reuters.com:*:nL4N2A33TL
    Panasonic's first profit at the venture comes as the
Japanese firm cedes its battery cell exclusivity, with Tesla
entering into partnerships with South Korea's LG Chem Ltd
 051910.KS  and China's CATL  300750.SZ .  urn:newsml:reuters.com:*:nL4N29Z336
    CATL said in a stock exchange filing on Monday it has signed
an agreement with Tesla to supply batteries from July 2020
through June 2022.  urn:newsml:reuters.com:*:nL4N2A303N
    Shares of LG Chem rose as much as 9% to their highest
intraday level in about 10 months, driven by hopes of a
turnaround in its money-losing EV battery business.
    The South Korean firm on Monday said it expected a
mid-single-digit profit margin in its EV battery business this
year, citing regulatory push in Europe.
    POSCO Chemical Co Ltd  003670.KS , which recently signed a
$1.6 billion deal to supply battery-making materials to LG Chem,
rose 4.6% in morning trade.
    CATL shares briefly rose 10%.
    Analysts said Tesla's diversified battery sourcing would
give the U.S. automaker the upper hand on battery costs.
    "This is likely to put pressure on Panasonic to improve
yield and efficiency," wrote Jefferies analyst Atul Goyal in a
note to clients.
    Panasonic Chief Financial Officer Hirokazu Umeda, in an
earnings briefing on Monday, said the company expects to
stabilise profit at the Gigafactory by next year, and that there
is a lot of room to improve production efficiency.
    Panasonic first entered into a battery supply agreement in
2009 and invested $30 million in Tesla to deepen the partnership
a year later.

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Tesla up 20% after Panasonic posts 1st quarterly profit at
battery business     urn:newsml:reuters.com:*:nL4N2A33TL
Tesla partners with LG Chem, CATL for battery supply   
 urn:newsml:reuters.com:*:nL4N29Z336
China's CATL signs battery supply agreement with Tesla   
 urn:newsml:reuters.com:*:nL4N2A303N
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Makiko Yamazaki in Tokyo and Hyunjoo Jin in
Seoul; Additional reporting by Chris Gallagher in Tokyo; Editing
by Kim Coghill and Christopher Cushing)
 ((chris.gallagher@thomsonreuters.com; 81-3-4563-2714;))