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US EV battery subsidy helps Panasonic create record-high net profits

Chiang, Jen-Chieh, Taipei; Peng Chen, DIGITIMES Asia 0

Credit: AFP

The EV business brought significant profits for Panasonic Holdings. According to Panasonic, NHK, and Nikkei, the group saw its consolidated revenue grow by 1.2% from April to December 2023. Its consolidated operating profits increase by 37%. Moreover, the group's after-tax net profit reached JPY399.1 billion (US$2.73 billion), surging by 145% year-on-year.

The net profits were the highest Panasonic group ever reported for the April-December period. The company reached JPY243 billion in the same period in 2013, its previous highest record.

The US Inflation Reduction Act (IRA) subsidies for local EV battery production significantly increase Panasonic's net profits. The company's battery unit produces batteries at Gigafactory 1, which it operates with Tesla in Nevada.

The IRA incentives also raised Panasonic's consolidated operating profits in the April-December 2023 period by JPY64.2 billion. When excluding this factor, the company's operating profits grew by 1% year-on-year.

At an earnings call, Hirokazu Umeda, chief financial officer for the Panasonic group, said the company is constructing another battery plant in Kansas, the US. The facility is expected to start production in the next fiscal year, which ends in March 2025 and will grow its battery business further.

Panasonic has been closely monitoring the US presidential election to see whether the results will change the country's subsidy programs for EVs and batteries. The company has also tried to optimize battery manufacturing efficiency to earn profits without the IRA incentives.

The Japanese company liquidated its LCD panel subsidiary in 2023, reducing its corporate taxes and improving its net profits.

Panasonic's automotive component business reported JPY22.6 billion in operating profits from October to December 2023, growing by 81% from 2022. The increase benefited from the resuming of production at car plants and the transfer of material price rise. Panasonic Automotive Systems, part of Panasonic's automotive component business, will be sold to the US-based Apollo Global Management.