Panasonic CEO: Reduce dependence on Tesla and pay more attention to other manufacturers

Japan's Panasonic Corp. plans to reduce its heavy reliance on Tesla Inc. by producing batteries that can be used in other brands of electric vehicles, outgoing CEO Kazuhiro Tsuga said.

Tsuga's comments come as Tesla has begun developing its own batteries and expanded its sourcing partners to South Korea's LG Chem and China's CATL to support its growing electric vehicle sales. "At some point, we need to get out of the one-legged approach of relying solely on Tesla," he said in an interview. "We are entering a different phase and need to pay close attention to the supply situation of manufacturers other than Tesla."

“At some point, we need to move away from our dictatorial approach of relying solely on Tesla,” Kazuhiro Tsuga said in an interview.

“We are entering a different phase where we need to pay close attention to manufacturers other than Tesla.”

The Japanese conglomerate announced in November that Kazuhiro Tsuga, who had been at the helm for nine years, would step down in April and be replaced by Yuki Kusumi, head of the company's automotive business.

Under Tsuga, Panasonic has shifted its focus from low-margin consumer electronics to batteries, factory machines and components. The company said last month it expected its battery business, which supplies Tesla, to be profitable this fiscal year.

As previously reported, Panasonic is working with Tesla to build a $5 billion battery "gigafactory" near Reno, Nevada.

In some ways, Panasonic’s move away from being Tesla’s sole battery supplier is a testament to the company’s evolution from a cash-strapped, loss-making company to the world’s most valuable automaker, with a market value of $665 billion, more than 22 times Panasonic’s own.

Panasonic is working on new, larger batteries as Musk reveals his ambition to halve Tesla battery costs within a few years, but Tsuga said the company will also need to make batteries for more than just Tesla electric vehicles.

Panasonic already has a battery partnership with Toyota and has previously supplied batteries to European automakers including Volkswagen. But the cylindrical lithium-ion batteries Panasonic makes for Tesla require complex temperature management skills to prevent the batteries from catching fire and make them last longer.

"We now need to make batteries that are easy for other carmakers to use," Tsuga said. "But it's difficult to sell them at the moment unless other companies can use the cylindrical batteries we make for Tesla."