Panasonic on Tuesday said it expects its battery business with Tesla to contribute to profit from the second half of its business year, as volume production of Model 3 cars increases.
Reuters noted the supplier is the exclusive battery cell supplier for new vehicles made by Tesla which in June reached a long-elusive target of making 5,000 Model 3 cars per week, albeit amid concern about whether it could sustain that level of production.
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"Production at Tesla is gaining momentum," Panasonic chief financial officer Hirokazu Umeda said at a briefing.
"We are ramping up a new (battery production) line now and expect the business to contribute not just to our revenue but also to our profit from the second half (starting in October)."
Reuters noted Panasonic's energy business – most of which is batteries of various kinds – posted an operating loss for April-June about five times larger to JPY8.4bn ($75.34m) due mostly to the costs of raising production at the 'Gigafactory' it operates with Tesla.
Due to strong demand for factory automation equipment, however, Panasonic's Q1 operating profit rose 19% year on year to JPY99.96bn – roughly in line with the average of seven analyst estimates compiled by Thomson Reuters I/B/E/S.
"For the past two years, Panasonic has spent on capex and R&D without being able to record revenues against those costs," analysts at Jefferies said in a recent client report cited by Reuters.
"By the end of this financial year, as Model 3 production run rate becomes stable and sustainable, it (Panasonic) should be able to record profits in its Tesla battery business."
Reuters said Panasonic had maintained its profit forecast for the year to 31 March 2019 at JPY425bn, 2% below the average of 21 analyst estimates.
