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Panasonic says it could make batteries with Tesla in China
Reuters | 2018/5/11

TOKYO -- Panasonic Corp. could jointly produce batteries with U.S. electric vehicle maker Tesla Inc. in China, as the Japanese electronics conglomerate looks to tap into China's surging EV demand, its CEO said on Thursday.

"As already reported, Tesla could in the future launch full-fledged production in China -- and we could produce jointly," Kazuhiro Tsuga said during an earnings briefing. It was Panasonic's first official acknowledgement that it could produce and supply battery cells for Tesla in the world's biggest auto market.

Panasonic produces battery cells for Tesla in Japan as well as at Tesla's so-called Gigafactory in Nevada, a U.S. state. Tesla uses the cells to make battery packs.

Battery cells are central to Panasonic's plan to nearly double automotive revenue to 2.5 trillion yen by the year through March 2022 as it shifts away from low profit margin consumer electronics.

The company said it expects battery cell sales to drive operating profit up 12 percent to 425 billion yen ($3.87 billion) in the year through March 2019.

The outlook was in line with the 429.76 billion yen average of 19 analyst estimates compiled by Thomson Reuters. However, it was below Panasonic's 450 billion yen target set three years ago, with the company blaming a stronger yen that reduces the value of profit earned overseas.

Panasonic expects profit at its automotive energy business, which includes battery cells, to more than double after production delays in Tesla's mass-market Model 3 car pressured profit in the previous year.

Tesla earlier this month promised to meet its production target of 5,000 Model 3 cars per week by the end of June.

To reduce the risk of over-relying on Tesla, Panasonic has teamed up with Toyota Motor Corp. to jointly develop batteries for EVs.

"Discussions with Toyota have been making progress," Tsuga said.

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