Japanese company and Tesla supplier Panasonic announced plans on Monday to cut domestic production of electric vehicle (EV) batteries due to some vehicle sales being slower than initially planned.
Panasonic says it plans to cut Japanese EV battery production by as much as 60 percent, citing slower sales than expected for specific Tesla models, according to a report from Nikkei Asia.
Despite slashing production, Panasonic saw record profits of 288 billion yen ($1.9 billion) in the six-month period running through September. The profits were also aided by subsidies in the U.S. for EV battery operations.
The statement of plans to slash production came during an earnings call for the company on Monday, with Panasonic CFO Hirokazu Umeda saying that some EV battery production lines had already been stopped in hopes of reducing already existing stockpiles of EV batteries. The report notes that the 60 percent figure is compared to its production numbers in Q1, and it’s expected to last between now and March 2024, the company said.
Umeda also stated that Panasonic dropped the supply of its 1865 EV batteries to Tesla during Q2, and the company says it plans to use some of that extra capacity to work with other customers. These older batteries, according to Umeda, are still in use in Tesla Model S and Model X vehicles.
He also alluded to the fact that the company may be looking beyond the auto industry for additional customers.
“We are talking with many other [potential domestic] customers,” Umeda said. “We are thinking of many uses [for the battery capacity].”
Currently, domestic EV battery production represents around 20 percent of Panasonic’s global total, and Umeda also noted that it will not increase production at its American factories at this time, either.
Panasonic’s record profits in the first half of the year came as consumer electronics saw a decrease in Asia as well as factory automation hardware in China. The profit record was in part due to 27.6 billion yen ($185.2 million) in federal U.S. subsidies during Q2, which have been split with Tesla.
The news comes after Panasonic shared plans in June to increase battery output at Tesla’s Gigafactory in Nevada as the site expands to accommodate additional production lines.