Daily Management Review

Panasonic Divests Its Stocks In Tesla For $3.6 Bln


Panasonic Divests Its Stocks In Tesla For $3.6 Bln
With the Japanese conglomerate Panasonic Corp seeking to reduce its dependence on the United State based electric car maker Tesla, the Japanese firm sold its stake in the US car maker for about 400 billion yen ($3.61 billion) in the year ended March, according to a spokesperson of the Japanese company on Friday.
Another of the objectives of selling off the stake for the bicycles-to-hair dryers conglomerate is to raise more revenues for further investments.
Much of the battery busine4ss of Panasonic is dependent on Elon Musk’s Tesla which uses the batteries made by the Japanese firm, among others, for its electric powered vehicles. Moreover, the relationship between the two companies has been tense at times as executives from both sides have publicly criticised the other.
In 2010, an investment of 430 million was made by Panasonic in Tesla and had acquired 1.4 million Tesla shares at a price of $21.15 for each share. That investment has not ballooned to about $730 million as of the end of March 2020as there has been an almost seven fold increase in the value of the shares since Panasonic had taken up the stake, As of Thursday’s close, Tesla shares were up 3.5 per cent at $679.82 a share.
"The impact of crypto assets may have pushed Tesla's share price above its intrinsic value, making it a good time to sell," said Hideki Yasuda, an analyst at Ace Research Institute.
Tesla had purchase some bitcoin and would accept payment for its cars in the cryptocurrency, Musk had announced in February this year. He had however later reversed the decision. Musk is also an influential figure in the crypto currency industry and his tweets cause swings in the price of crypto assets such as that of bitcoin which had gained value after Musk’s initial comments on Tesla accepting bitcoin as payment.
Tesla was well supported financially by Panasonic when it was smaller.  However, now that Tesla has become the most valuable car company of the world and as it expands globally, there is no need for any more capital ties between the two companies, Yasuda said.
The Panasonic spokesperson told the media that the relationship between eth two companies will not be affected by the stake sale by Panasonic. The Japanese conglomerate had decided on the stake sell off following a review of its shareholdings according to the corporate governance guidelines of the company.
This stock sale by Panasonic was made at a time when the US electric auto maker itself is diversifying its own battery supply chain and collaborating with more suppliers in addition to its .current Japanese partner.
Deals with South Korea's LG Energy Solution, a unit of LG Chem, and China's CATL have been inked by Tesla already for supply of batteries for its cars. According to recent reports, the Chinese batter maker is planning to build a battery factory in Shanghai, China, near the production base of Tesla.
Earlier this year, Panasonic had said that it would be purchasing off the shares of US supply-chain software company Blue Yonder that it does not already own for $7.1 billion.