Daily Management Review

Profit Warning And Tesla's Maxwell Deal Sees Panasonic Shares Plunging


Investors of Japanese tech giant Panasonic Corp was hit by a double blow as the company issued a warning on its fill year outlook and news about its main customer for electric vehicle (EV) batteries Tesla deciding to purchase a battery tech company.
The double blow spooked investors as they engaged in the selling spree resulting a fall of share prices of Panasonic by as much as 6.5 per cent. The Japanese tech company and the maker of batteries for electric vehicles also reported a fall in the earnings for the quarter which was also a blow for investors in addition to the drop in full year forecast and Tesla deciding to increase its self dependence in tech of EV batteries.
The operating profits of the Japanese tech firm for the October-December period dropped by as much as 19 per cent as reported by the company which prompted the company to announced a drop of 9 per cent in its over all operating profit outlook for the entire year.  
Both the numbers were far below the estimates of analysts.
Tesla has announced its decision tp purchase Maxwell Technologies Inc which manufactures ultracapacitors which are put to use in automobile batteries for increasing the shelf life of the batteries. The all-stock deal, according to experts, would help the car maker to make significant enhancement to its battery technology which is critical because the company is set to increase production for its most affordable Model 3 sedan cars – the success of which has been identified to be critical for the survival of the company. The client list of Maxwell includes a number of auto companies that are also engaged in development and manufacture of electric cars such as General Motors Co and Volkswagen AG subsidiary Lamborghini according to information on the website of the company. Ultracapacitors help in storage of electric energy and adequately complements battery cells.
Currently, Panasonic is the only supplier of battery cells for the electric cars of Tesla and conversely, this US based electric car maker is also the largest client for the EV battery cells of Panasonic. Some types of ultracapacitors are also manufactured by the Japanese electronics company.
According to industry analysts in Japan, the main cause of investor concern is the outlook warning issued by Panasonic. They said that the impact of the Maxwell deal on Panasonic is not yet clear.
“The latest earnings have revealed how tough the situation is for Panasonic,” said analyst Masahiko Ishino at Tokai Tokyo Research Center.
The threat of Panasonic losing its exclusivity of supplying electric car batteries for Tesla has existed as Tesla Chief Elon Musk had said earlier that the US car maker were making strategies which would allow it to get its car batteries locally for cars to be manufactured at a new car factory in Shanghai. He had said that the source of the batteries would “most likely be from several companies.”
In current times, moving away from low-margin consumer electronics, Panasonic has been more focused on production of new products such as automotive batteries and cockpit systems. However, “it’s clear it’s suffering in business-to-business areas as well,” Ishino said.