* Text/Spades with long sword
Panasonic is running faster and faster on the road of transformation.
On April 1, the 105-year-old Japanese electronics company issued a statement that it plans to invest 400 billion yen (about 20.78 billion yuan) in "growth areas" including electric vehicle battery cells from 2022 to 2024, and an additional 200 billion yen in the "technology pillar" field, including hydrogen energy. In addition, Panasonic has set a financial target for the next three years: to achieve a cumulative operating profit of 1.5 trillion yen (about 77.932 billion yuan).
The introduction of the specific investment plan means that Panasonic has taken a solid step in its transformation strategy, and perhaps its most determined step - previously, although Panasonic has successively spun off plasma TV, semiconductors, consumer electronics and other businesses, the overall direction of the group is still not clear. Until today, this big ship that has been traveling for a hundred years has really found the right direction.
However, even if Panasonic is ready to bet on the battery business in the future, it still has to face several difficulties. Among them, the biggest problem does not even come from opponents, but from Panasonic's once close partner , Tesla.
Turning the clock back to 2009, Tesla was just another startup stuck in the quagmire of component capacity, and its leader Elon Musk was looking for foreign aid around the world to increase its own production capacity. Coincidentally, Panasonic was also very interested in the automobile industry at that time, so the two sides hit it off. In addition to the battery supply agreement, Panasonic has also injected capital into Tesla several times after its listing, and even jointly built a factory with it.
For several years, Panasonic has provided Musk's super car-making program with high-quality batteries, supporting Tesla all the way to the throne of the world's largest car company by market capitalization. But when people thought that the relationship would continue into the next decade, The relationship between Panasonic and Tesla took a sharp turn for the worse, with friction between the two sides over issues such as battery production and manufacturing.
Moving into 2021, Panasonic is noticeably more aggressive — it not only publicly stated that it "wants to get rid of Tesla dependence," but also sold all of its tesla stake in June and profited from it. According to Panasonic's fiscal 2020 cash flow statement released in the same period, its asset sales revenue, including the sale of shares, reached 429.9 billion yen, an increase of 380 billion yen over the previous fiscal year.
While Panasonic was busy selling Tesla stock, former Panasonic CEO Kazuhiro Tsuga was also busy preparing to step down. Before becoming chairman, he expressed his views on Tesla, arguing that Panasonic must increase the production of electric vehicle batteries from other brands to reduce its dependence on Tesla. Previously, he had been considered a "hardcore" supporter of Musk.
“...... We need to make batteries that are easy for other automakers to use, but it's hard to sell at the moment unless there are other companies that can use the special cylindrical batteries we made for Tesla. Kazuhiro Tsuga said.
Why did the original good partner come to this point? The reason is none other than that Panasonic and Musk are really not good.
Since 2019, Panasonic and Tesla have blamed each other on the issue of battery production. Musk believes that Panasonic's battery capacity does not meet the standards of the gigafactory, resulting in the company having to limit Model 3 production; Panasonic said in its earnings report that "there is not enough capacity to meet Tesla's expanding business" and that "if Tesla continues to expand its business, the battery will run out."
At that time, Tesla and Panasonic had already established the Nevada Gigafactory in North America to meet the former's monster battery demand, but on the other hand, Musk's requirements for battery quality and cost also reached new heights. For example, Tesla's 21700 battery has a battery energy density of 20% higher than 18650, while the cost has dropped from $180/Wh to $170/Wh.
The high-quality battery did drive Tesla's sales in the market, but it also overwhelmed panasonic behind it. In September 2019, Tsuga Kazuhiro poured bitter water in an interview with the media, saying that Musk repeatedly asked Panasonic to reduce the purchase price. "Once I responded to him that if this continues, we will consider removing all Panasonic employees and equipment from the Gigafactory."
It is worth noting that this is also the first time that Tsuga Kazuhiro has shown regret for working with Tesla. "If you asked me if I regretted investing in the Tesla Gigafactory, I would say, yes, of course." Kazuhiro Tsuga responded.
Musk's personality certainly displeased Panasonic, but for it, the more troublesome thing is to make a profit.
Since the first Model 3 came off the production line, Panasonic has been increasing battery production capacity at Tesla's request, but this also means that its factory will be saddled with high losses, which is contrary to Panasonic's long-term cost reduction and efficiency-increasing strategy - Panasonic went from 2C to 2B, and cooperated with Tesla, in large part to reverse the huge loss of 780 billion yen at that time. In the case of production capacity being "dragged away" by the other party, it is not good for Panasonic to be deeply bound with Tesla.
However, Panasonic is still inseparable from Tesla, a big customer, which can be seen from its financial report.
According to Matsu's fiscal 2020 (April 2020-March 2021) financial report, sales in the company's battery division fell by 10% from fiscal 2019 to 1,339.4 billion yen, but the operating profit of the division turned from a loss of 46.6 billion yen in fiscal 2019 to a profit of 10.9 billion yen.
For the successful turnaround of the battery business, Panasonic CFO Umeda Hirowa believes that the continuous improvement of in-vehicle equipment is one thing, but more importantly, the profitability of Tesla's related business. He also said that panasonic battery division's net profit will reach 50 billion yen in fiscal 2021 because sales of equipment such as in-vehicle batteries are still expected to increase.
To this day, Panasonic is still supplying batteries to Tesla and plans to participate in the production and manufacture of its new generation of batteries. On June 24 last year, Panasonic's new president and CEO Yuki Kuami said in an interview with the media that the company will increase significant investment to produce new 4680 lithium-ion batteries for Tesla and other electric vehicle manufacturers.
However, Tesla seems to have abandoned its early fantasies about Panasonic. When the Shanghai Gigafactory was completed that year, Musk stressed that the domestic Tesla would use batteries provided by several companies, including LG Chem, not just Panasonic. In addition, the domestic battery giant Ningde Times has also successfully entered the Tesla supply chain in 2020 and developed rapidly relying on local advantages. According to the information of China Energy Storage Network, the supply of Tesla in the Ningde era has far exceeded LG Chem and Panasonic.
For Panasonic, worse things are still to come - Chinese battery companies such as Ningde Times, BAK, Lishen, Ewell Lithium Energy and Honeycomb Energy are all promoting the research and development of 4680 batteries, and Musk set a "goal of delivering 20 million vehicles in 2030" for Tesla as early as last year; it is envisaged that if one of these companies does better than Panasonic in terms of production capacity, will Musk, who attaches great importance to supply chain efficiency, completely kick the latter away? This is one of the issues that Panasonic needs to worry about in the future.
*Image courtesy of Yandex