Inventory No. 4 of the world’s top ten power battery companies: Panasonic

Editor's note: We have selected ten power battery companies based on 2022 data and look forward to future development. Let’s start with the foreign countries with less controversial rankings: LG, SK on, Samsung SDI, and today’s Panasonic. This is the fourth and final article of foreign battery companies. The next step is to start taking inventory from the CATL era in China.

When I took stock of Panasonic's battery business, I felt it was a pity. Here we sort out Panasonic’s energy business:

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• Fourth quarter of 2022

Revenue was 247.4 billion yen (¥12.5 billion), a year-on-year increase of +26% and a month-on-month increase of +2.2%, of which power battery revenue was 8.61 billion yuan and energy storage and other revenue was 3.69 billion yuan.

Operating profit is 10 million yuan. I won’t go into details about this data.

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• Energy sector in 2022

Revenue was approximately 915.5 billion yen (¥46.6 billion), a year-on-year increase of 34%.

Operating profit was 2.16 billion yuan, -41% year-on-year.

While the world's largest battery companies are developing rapidly, Panasonic has stagnated, and its customers are limited to a few automobile companies such as Tesla and Toyota.

Figure 1. Development of Panasonic’s battery business

Development of Panasonic’s battery business

The operating profit margin of Panasonic's battery business is 1%, which is mainly affected by rising raw material prices and the decline in the proportion of consumer batteries. For now, Panasonic will mainly rely on automotive battery supply agreements to increase profits, especially 4680 and 2170 batteries for electric vehicles.

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• 2170 batteries are mainly used in Tesla Model 3 and Model Y vehicles in the United States.

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• 18650 is used in Model S Plaid and Model X vehicles.

Panasonic said it will focus on the North American market and achieve profit growth by expanding sales of 2170 batteries and commercializing 4680 batteries. Renovation of the Wakayama factory in western Japan to promote the commercialization of 4680 batteries. Trial production of 4680 batteries will begin in the second quarter of 2022, making it possible for Panasonic to start large-scale prototype production in May 2023.

Panasonic signed a supply agreement with Lucid in mid-December last year to provide EV batteries for its Air product line. Judging from Lucid's current performance, the overall demand is average.

Figure 2 Panasonic’s current cylindrical battery plan

The construction of battery factories in the United States is mainly driven by the IRA Act. The factories are expected to enjoy tax credits of $35/kWh.

The Nevada plant will be eligible for tax credits starting in January 2023, with an estimated annual output of 39GWh and an annual tax credit of approximately US$1.3 billion;

The Kansas factory has been qualified since production and sales. It is expected to mass-produce in FY25, with an annual output of 30GWh, and an annual tax credit of approximately US$1 billion.

Figure 3. Panasonic plans around North American demand

From the current point of view, Panasonic's biggest hope is that the 4680 large cylinder factory in Japan is expected to be supplied to North America in 2023, and the 21700 production line in Kansas, the United States, is expected to be mass-produced in 25 years.

Judging from the current production capacity layout, Panasonic's battery production capacity is mainly concentrated in North America.

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• Japan (15GWh): The Wakayama factory in the west is undergoing renovation, and mass production of 4680 units will begin in 2023 for North America, mainly Tesla.

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• United States (55GWh): The previous 39GWh production line of the Nevada factory is expected to be expanded to 55GWh.

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• Europe: Plans to build first battery factory in Norway, but who will the customer be?

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• China: The company currently has a 10GWh prismatic battery production line in Dalian.

The Tokushima plant in Japan, a joint venture between Panasonic and Toyota, will also reach a production capacity of 500,000 hybrid vehicles. From the overall production capacity layout, there seems to be no major attraction except the United States.

Figure 4. Panasonic’s cylinder strategy

The gains and losses of Panasonic batteries

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• strategic choice issues

In 2009, Panasonic provided 18650 batteries to Tesla , which was a fateful friendship; in 2010, Panasonic had a market value of US$30 million when Tesla IPO. In 2011, in order to ensure the production of Model S, Panasonic signed a supply agreement for 640 million 18650 battery cells . In 2013, Tesla and Panasonic renewed their agreement to expand the supply of battery cells to 1.8 billion units, and Panasonic became Tesla's exclusive strategic supplier.

While Tesla was preparing to build a Gigfactory with US$5 billion, Panasonic participated in the investment of US$1.6 billion in the first Gigfactory in Nevada. Without Panasonic, there would be no Tesla.

In 2018, Panasonic's investment exceeded original expectations on the one hand, and its overall profitability was also average. Tesla officially promoted the Tesla Shanghai factory and did not continue to increase investment in China. This is the biggest problem. Of course, there are also issues such as battery whitelisting and subsidies here, but the first time Panasonic fell into passiveness was around this point of disagreement in the North American market.

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• Joint venture Toyota

In 2017, a new power battery company, Prime Planet Energy & Solutions (PPES), was established in cooperation with Toyota. Toyota holds 51% of the shares and Panasonic holds 49%. All Panasonic's prismatic battery technology, factories, and personnel have been transferred to PPES. Of course, this didn't make any difference, and Toyota's current electric vehicle business is also lackluster.

Figure 5. Panasonic’s square casing business

In Panasonic's own power battery business, only cylindrical batteries remain. Fortunately, as the world begins to develop in the direction of large cylindrical batteries, Panasonic's accumulation in this field still has its own unique value.

Summary: On the whole, Panasonic is a typical loser who runs ahead. If you are too stubborn in the process, you will really suffer. We will continue to pay attention to the progress of Panasonic's large cylindrical batteries. We can see some changes from Panasonic, which will greatly promote the entire large cylindrical battery market.