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Panasonic Corp., the main supplier of lithium-ion battery cells to Tesla Motors Inc., has said that cooperation with the electric-car maker on the construction of a massive U.S. battery plant is likely to boost demand from European automakers.

“The development with Tesla is catching a lot of attention in Europe,” said Laurent Abadie, who heads European operations for the leading home electronics maker. “It could bring some acceleration to this industry. Especially the German carmakers are trying to catch up.”

As a result, Panasonic will be able to expand its market-leading position in car batteries, which it already supplies to such companies as Volkswagen, Abadie said.

Some of Europe’s automakers are reconsidering their battery options. Daimler said in May that it’s working on the “future positioning” of its German Li-Tec battery plant after Manager Magazin reported that the firm plans to shutter the site and turn to LG Electronics Inc. to supply cells for an electric version of its Smart car.

Renault and Nissan said they are committed to their electric vehicle program and denied a report that they may cut battery production and buy cells from LG Chem Ltd.

Tesla, run by Elon Musk and based in Palo Alto, California, won tax breaks worth as much as $1.3 billion from Nevada as part of its proposal to bring the world’s largest lithium-ion “Gigafactory” to the state. Panasonic is investing heavily in the plant, which will be able to produce as many as 500,000 car batteries per year.

Panasonic is also anticipating more demand for optical lenses and sensors that allow cars to react to traffic situations without driver input. The market for these components is growing tenfold every two years, Abadie said.

The technology — adapted from consumer cameras such as Panasonic’s Lumix series — will probably also find buyers in the airline industry, the executive said. The company is currently in talks with U.S. airlines to supply face-recognition tools that help carriers identify and serve frequent travelers and other high-value customers, he added.

Those kind of product areas are becoming more important for the Osaka-based company as traditional stalwarts falter. Panasonic has suspended plasma panel production, trimmed smartphone and circuit board operations, and sold a stake in semiconductor factories to focus on faster-growing businesses.

The company has said it intends to make its digital camera business profitable in the fiscal year ending in March. At the Photokina fair in Cologne, Germany, the company is currently presenting new devices including the compact cameras Lumix LX100 and Lumix GM5 to boost its portfolio of small, high-end cameras.

As consumers increasingly turn to smartphones and tablets with high-resolution lenses rather than specialized devices, shipments of digital cameras have dropped by more than half over the past two years. That has driven Panasonic into a battle with manufacturers such as Sony Corp., Nikon Corp. and Canon Inc. for sales of more compact, advanced devices.

Worldwide digital camera shipments plunged to 3.5 million units in July from 5.3 million the same month a year earlier, and from 7.7 million in July 2012, according to Japan-based Camera and Imaging Products Association.

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