The coronavirus pandemic has not been kind to multiple companies across the globe, and Panasonic has been one of its victims. The Japanese consumer electronics giant is no stranger to the effects of the virus, with the company posting a 29% drop in its annual operating profit. Yet despite these results, one aspect of Panasonic’s business proved to be a silver lining, logging a second straight quarterly profit despite the pandemic.
This aspect of Panasonic’s business was its battery partnership with American electric car maker Tesla. When it posted its most recent results on Monday, Panasonic stated that its battery venture with Tesla in Gigafactory Nevada had been profitable from January to March 2020. The Japanese firm did not provide further details, but its results were telling, and it hinted at the resilience of consumer demand for Tesla’s products.
Panasonic’s production over the recent months was walloped by the coronavirus, with the outbreak forcing the company to close several of its plants across the globe. This was a massive blow to Panasonic, especially as the pandemic disrupted supply chains for components used in devices such as laptops, washing machines, factory equipment, and even automotive components.
The coronavirus disrupted the world’s supply chain at a time when Panasonic was struggling to find new ways to grow, considering that its strategic shift to components from consumer electronics has not driven as much profit growth as expected. Over January to March for example, Panasonic’s automotive business sank deeper into a loss.
Thanks to its battery partnership with Tesla, though, Panasonic’s recent report was not entirely negative. The Japanese firm may not have disclosed exactly how much profit it made with its partnership with Tesla, but it goes a long way into proving that the electric car maker and its battery-powered products can buck the trend in an otherwise challenging market. This is especially true since Panasonic has taken a rather conservative stance with its Tesla partnership.
The company, for one, has exited solar cell production in Gigafactory New York, Tesla’s facility that’s primarily tasked with producing energy products. Panasonic has also been unable to secure an exclusive battery partnership with Tesla when the electric car maker opened Gigafactory Shanghai. Instead of Panasonic, Tesla has entered into a partnership with South Korean firm LG Chem, as well as China-based CATL, which is reportedly poised to release a million-mile battery for the electric car maker.