Panasonic Holdings (6752.T), which supplies Tesla (TSLA.O), highlighted a global slowdown in E.V. sales on Monday by announcing that it had reduced vehicle battery output in Japan in the September quarter and lowered the division’s annual profit prediction by 15%.
The company’s less optimistic assessment of its battery business comes after similar cautions issued by several automakers and suppliers due to slower growth in major nations like China and Europe.
According to Panasonic’s Group CFO Hirokazu Umeda, the energy unit produced battery cells for Tesla’s high-end Model S and Model X, which during the quarter had a price tag higher than what would qualify them for tax credits in the United States.
“Demand has decreased because these are luxury cars that cost more,” Umeda told reporters and analysts during a briefing on the business’s second-quarter financial results.
To normalize stocks, the company cut its output of automobile batteries in Japan by 60% in the second quarter compared to the previous three months, according to Umeda.
For the energy segment that produces batteries for Tesla and other automakers, Panasonic reduced its full-year operating profit expectation from 135 billion yen ($769 million) to 115 billion yen.
Based on the robust demand it had observed in the first quarter, the business was managing its stockpiles. “We were working to optimise inventories while closing lines, rather than completely shutting down operations,” stated Umeda.
According to Panasonic, the U.S. Inflation Reduction Act caused customer demand for high-end EVs to shift, negatively impacting the battery unit’s manufacturing in Japan. Panasonic provided this information in presentation materials made available on their website.
Panasonic reported stable output at its North American facilities and strong sales of cars qualifying for tax rebates.
The South Korean battery company L.G. Energy Solution (373220. K.S.) issued a warning last week about how concerns about the state of the world economy will affect the outlook for E.V. sales, which would slow revenue growth in 2024.
This month, Elon Musk, the CEO of Tesla, expressed caution about the company’s plans to increase its electric car manufacturing capacity. He expressed concern that, even with price reductions, increasing financing charges would make Tesla’s automobiles unaffordable for prospective buyers.
Tesla lowered the cost of its Model S and Model X cars in the U.S. in September so that some models might be eligible for tax breaks from the government.
To save expenses, General Motors (GM.N.) is likewise delaying the release of several E.V. models and reducing its expenditure on E.V. products.