Japan’s Panasonic, that manufactures the batteries used in Tesla’s electric vehicles, is forecasting a drop in annual earnings on restructuring expenses and higher costs at its automotive business. According to BNN Bloomberg, the company is predicting a decline in sales, operating income, and net income for the whole year.
Shares of Panasonic were little changed in Tokyo before the company reported earnings. The stock has lost about one percent this year, giving the company a market value of about US$22 billion.
Tesla and Panasonic have been joined at the hip since the gigafactory agreement was first announced in July 2014, even if on paper they’re a bit of an odd couple.
Citing fall in sales at its industrial solutions business in China as well, CEO Kazuhiro Tsuga said that Panasonic’s aim this year is to ramp up output before considering more investment. “Batteries will run out if Tesla starts to sell the Model Y and expands its business next year,” he told reporters:
“What will we do then? It’s one of a few topics to discuss with Tesla, including battery production in China,” Tsuga continued.
Tesla Chief Elon Musk had already warned in a Tweet last month that Panasonic was operating at a pace that has constrained the production of Tesla’s Model 3 sedan.