Panasonic plans to reduce its heavy reliance on Tesla by making batteries more compatible with electric vehicles from other global automakers, the Japanese conglomerate’s outgoing CEO said.
Kazuhiro Tsuga’s comments come as Tesla begins to develop its own batteries and expands its sourcing partners to LG Chem in South Korea and CATL in China to support growing electric vehicle sales.
“At some point, we have to move away from our one-legged approach to relying solely on Tesla,” Tsuga, who is stepping down as CEO after nine years to become chairman from April 1, said in an interview with the Financial Times. “We are entering a different phase and have to keep an eye on manufacturers other than Tesla.”
Panasonic made its first investment in Tesla in 2010, but it was under Tsuga that Panasonic decided to shift its focus to the auto industry after pulling the plug on its plasma displays and other loss-making consumer lines to invest in Tesla’s $5 billion gigafactory in Tesla. Nevada.
After spending more than $2 billion on their battery manufacturing joint venture since the two companies signed a deal in 2014, those efforts are finally paying off as Panasonic expects to make its first annual profit from Tesla’s battery business when it closes. fiscal year ends in March.
In some ways, the fact that Panasonic is no longer Tesla’s sole supplier is testament to how far Elon Musk has expanded his company from a loss-making, low-money company to the world’s most valuable automaker, worth $665 billion – more than 22 billion dollars. times greater than Panasonic’s own market value.
Panasonic is now working on new battery cells based on a larger size, as Musk has revealed ambitions to halve the cost of Tesla’s batteries in a few years.
But Tsuga said the company will also need to make batteries that aren’t just for use in Tesla’s vehicles.
Panasonic has an existing battery agreement with Toyota and has previously supplied batteries to European car manufacturers, including Volkswagen. But the cylindrical lithium-ion type it makes for Tesla requires advanced temperature management skills to keep batteries from catching fire and to make them last longer.
“We need to make batteries that are easy to use for other automakers,” Tsuga said. “Right now it’s hard to sell unless there’s a company that’s able to handle our Tesla-spec cylindrical batteries.”
For Tsuga, the partnership with Elon Musk was also part of his efforts to change the inward-looking corporate culture of the Japanese conglomerate, along with high-profile executives from Microsoft and Google.
After incurring losses of nearly $15 billion in the two years to March 2013, Tsuga spent most of his nine years as CEO closing those losses and shifting the company to higher-margin companies.
The company’s balance sheet has since been reinstated, and the group is now in talks on a multi-billion dollar deal to buy US supply chain software provider Blue Yonder, according to two people knowledgeable about the discussions.
“But when I tried to move into high-growth areas like the automotive sector, I realized that the various other companies were not able to build a growth strategy and losses were popping up everywhere,” Tsuga said.
To break that downward spiral, he announced plans to transfer the group to a holding company structure under the new CEO and current head of auto company Yuki Kusumi.
The move, he says, will enable rapid decision-making while instilling more discipline to ensure financial targets for each division are met. He suggested that those that fail are likely to be put up for sale.
“Because Panasonic is such a large company, people felt they could survive by moving to another division, even if there was no future where they were now. We have to make sure there is no escape route,” he said.