Tesla's Production Surge Means Losses for Battery Supplier -- WSJ
November 01 2018 - 3:02AM
Dow Jones News
By Sean McLain
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (November 1, 2018).
TOKYO -- Tesla Inc. supplier Panasonic Corp. said its battery
business lost money for a second consecutive quarter as production
of the electric-car maker's Model 3 sedan accelerated.
Panasonic on Wednesday posted a Yen7.3 billion ($65 million)
operating loss for the July-September quarter in the business
segment providing the battery cells that power Tesla's electric
cars. Elon Musk, Tesla's chief executive, has been pushing to
produce 5,000 of the entry-level Model 3s a week, a pace he has
said is necessary to generate steady profits.
Last week, Tesla reported a record quarterly profit, crediting
increased deliveries of the Model 3, which starts at $46,000. Tesla
said it produced an average of 4,300 Model 3s a week, excluding
planned downtime, during the quarter.
Panasonic said it had to add production more quickly than
anticipated and hire more workers at the Nevada battery factory it
jointly runs with Tesla, known as the Gigafactory. The increase in
fixed costs pushed the business into the red, the company said.
"We are investing in a lot of people so we can catch up with the
pace of production," said Hirokazu Umeda, Panasonic's chief
financial officer.
Mr. Umeda said Panasonic hopes to reap the benefits of increased
Tesla sales in the latter half of the Japanese company's financial
year, which ends in March. It aims for a Yen22.1 billion full-year
operating profit from the battery business, which lost Yen8.4
billion in the April-June quarter.
Mr. Musk's Twitter activity has drawn the ire of regulators.
Panasonic's chief executive, Kazuhiro Tsuga, said he is concerned
about the tweets but the business relationship remains intact.
"Elon being Elon, it's very difficult to foresee what he will do
in the future, but we hope there will not be confusion in the
business itself," Mr. Tsuga said. "It is important to us for
Tesla's business to grow smoothly over the long term and in a
stable manner."
Tesla is Panasonic's largest battery customer, but the Japanese
company wants to sell more to other car makers.
"We're trying to hedge the risk as much as possible," Mr. Tsuga
said.
Write to Sean McLain at sean.mclain@wsj.com
(END) Dow Jones Newswires
November 01, 2018 02:47 ET (06:47 GMT)
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