After almost nine years as chief executive officer of Panasonic Corp., Kazuhiro Tsuga says he is handing off a leaner business with enough cash to invest in new areas such as overseas manufacturing, upgraded battery technology for its partnership with Tesla Inc. and air-cleaning and conditioning.
Panasonic is embarking on a corporate revamp that will usher in automotive business head Yuki Kusumi as CEO from April, who will then spend a year reshaping the iconic electronics conglomerate into a holding company. The new structure, in turn, will make it easier to decide where to invest for long-term growth, Tsuga said in an interview this week.
One of these areas is Panasonic’s business of supplying batteries for electric vehicles. There, it is looking at several capital-intensive projects, including a new battery factory in Europe and mass production of a more powerful lithium-ion battery cell.
“Electric vehicles are just at their beginning and in order to keep developing our battery technology, this requires a lot of cash,” Tsuga said in the interview.
Tsuga took the reins at Osaka-based Panasonic in 2012, just as the company posted its worst-ever loss of ¥772 billion amid a slump in its core consumer-electronics business. Slashing costs and cutting loose the struggling plasma TV operations and other loss-making segments, Tsuga gradually restored reserves. At the end of 2020, Panasonic had about ¥1 trillion in cash and cash equivalents, more than double what it held in 2012.
“We need to continue to invest to keep growing,” Tsuga said. “We have ample room to do that.”
Panasonic will focus on investing in sectors where it’s still weak, such as information technology, Tsuga said. The Nikkei newspaper said this week that Panasonic is set to buy the rest of U.S. supply-chain software developer Blue Yonder that it doesn’t already own for ¥700 billion, citing people familiar with the plans. The company, which took a 20% stake in Blue Yonder last year, said Tuesday it is considering various measures to improve corporate value, and that nothing has been decided with regard to the Arizona-based firm.
The electronics maker will also explore investments in its air-conditioning and indoor air-quality business, Tsuga said. The pandemic, along with climate change, is fueling demand for such appliances for rivals as well. “That’ll be a big area of growth for us,” particularly in Europe and China, where the company will look at forming partnerships with local players, he said.
Within the automotive sector, Panasonic is working to develop a new battery cell called the 4680. First announced by Elon Musk at Tesla’s Battery Day in September, the EV-maker’s CEO said the larger, tab-less cell holds six times more power than Tesla’s existing cells while also bringing costs down by more than half.
Panasonic is working to set up a prototype production line, the cost of which is reported to run into the tens of millions of dollars. With the promise of helping to drive down the total cost of EVs, 4680 cells potentially made by Panasonic are gaining interest from automakers other than Tesla, Tsuga said.
In November, Panasonic signed a memorandum of understanding to explore building a battery factory in Norway, a strong market for EVs, with several local entities. If the project is determined to be cost-effective, Panasonic may produce the 4680 cell there and supply batteries to Tesla’s first European factory under construction outside of Berlin. Once Panasonic builds scale, “it’s very likely we’ll have that opportunity,” Tsuga said.
Tesla and Panasonic’s relationship began just before Tsuga took over in 2012, around the time when the Japanese manufacturer agreed to provide batteries for Tesla’s Model S. Panasonic kept pace with the ambitious Fremont, California-based newcomer through the years, agreeing to invest $1.6 billion in a joint facility in Nevada called the Gigafactory. Even as Panasonic’s business with Tesla saw losses, Tsuga said he remembers feeling that electronics makers like Panasonic would play a central role in the auto industry’s long-term shift to EVs.
As demand for Tesla vehicles took off, Panasonic’s cylindrical battery business, which is mainly for Tesla, moved into the black in the July through September quarter, and the company forecasts it will be profitable for the fiscal year ending March 31. Panasonic plans to launch an additional production line at the Gigafactory.
Working alongside Tesla has at times been a “tough road,” Tsuga said, but it’s also led to positive cultural changes within Panasonic, adding for that, “I’m grateful.”
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