In a recent development, Panasonic (OTC:PCRFY) Holdings, based in Japan, has revised its profit forecast for its energy unit, a crucial battery supplier for Tesla (NASDAQ:TSLA) and other high-end electric vehicles (EVs). The company has reduced the forecast by 15% due to an anticipated drop in demand in North America and economic slowdowns in key markets such as China and Europe. This move aligns with the concerns of automakers and suppliers who foresee a downturn in EV sales.
On Monday, Hirokazu Umeda, Group CFO of Panasonic, announced that the company had scaled back its automotive battery production in Japan. This decision aligns with the 15% reduction in the division's annual profit forecast during Q3. The energy unit of Panasonic, responsible for manufacturing batteries for Tesla's luxury Model S and Model X, has experienced decreased demand due to high costs. This led to a 60% output cut in Japan during Q2 for inventory optimization.
The full-year operating profit forecast for the energy unit was revised down to 115 billion yen ($769 million) from an initial 135 billion yen. To manage inventories, Panasonic is closing lines rather than completely halting operations.
The U.S. Inflation Reduction Act has also played a role in influencing consumer demand for high-end EVs. Despite maintaining steady production at its North American operations, Panasonic, along with LG Energy Solution and General Motors (NYSE:GM), is facing challenges due to global economic uncertainties.
In response to these issues, Tesla has adopted a cautious stance on production expansion while simultaneously reducing prices for its Model S and Model X vehicles. Similarly, General Motors is slowing down the launch of several EV models and cutting back on EV product spending.
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