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Panasonic bets on its strength in batteries to drive profit

Key Tesla supplier aims to profit from clean energy shift

Yuki Kusumi recently assumed the CEO position at Panasonic. (Source photo by AP) 

TOKYO -- Panasonic, a key Tesla supplier, aims to capitalize on its strength in battery technology to drive profit amid an accelerating shift to clean energy, its CEO said on Thursday.

Yuki Kusumi, outlining the company's focus under his new leadership, placed clean energy and resource efficiency at the core of its business operations, as his company aims to go on the offensive after years of restructuring.

Kusumi came into office last month, taking over from outgoing chief Kazuhiko Tsuga.

Panasonic has long produced various types of batteries. In addition to batteries for electric vehicles, the Osaka-based company makes solar panels, hydrogen fuel cells, and storage batteries for use at home, offices and factories.

Kusumi said the company was now developing a small-scale energy system that can power offices and factories without using fossil fuel. The system combines fuel cells, solar panels and storage batteries: It generates solar power on sunny days, uses fuel cells on cloudy days or at night, and then stores electricity in batteries to even out supply. The system will be capable of producing electricity at or below the current electricity rates.

Demand for such a system is expected to grow, at least in Japan where Prime Minister Yoshihide Suga in October made a commitment to achieve net zero emissions by 2050.

The company aims to generate 300 billion yen ($2.7 billion) in sales in 2030, by selling them in Japan, China, and Europe among other countries.

The joint venture with Tesla is another key focus in the clean energy field, Kusumi said, adding that the company will keep its technological edge in the field, where it competes against China's CATL and South Korea's LG Chem.

Kusumi said that the company will focus on the development of a new battery, code-named "4680," which Tesla unveiled last year. The new cell is believed to increase the range of Tesla electric vehicles and make them more affordable.

Kusumi said the joint venture with Tesla is another key focus for Panasonic.   © Reuters

Business solutions are another area of focus, Kusumi said, as he tries to accelerate the company's shift away from the traditional hardware business of selling electric appliances, avionics and automotive displays.

Its acquisition of Blue Yonder, a U.S. developer of supply chain management systems, for $7.1 billion last month is aimed at transforming Panasonic into a business solutions company that helps other entities such as retailers eliminate any inefficiency in their supply chain from procurement to distribution to inventory.

Kusumi says he is going to shift away from his predecessor's focus on restructuring.

Under previous CEO Tsuga, Panasonic decided to exit plasma panel displays and smartphones in 2013, semiconductors and liquid crystal panels in 2019 and solar panels as a stand-alone business this year.

Panasonic is also looking to exit production of low- and mid-end TVs to focus on the high-end segment with products such as OLED TVs.

Kusumi said his focus was on improving the remaining businesses, although it remains to be seen if investors buy his strategy.

Panasonic shares have fallen 20% in the last three months after the Nikkei reported on the acquisition of Blue Yonder. The decline has also been spurred by the company's cautious profit forecast for the current fiscal year.

Panasonic faces uncertainties such as the ongoing COVID outbreaks in Japan, shortages of semiconductors, which have crippled production at automakers, which are key Panasonic customers, and high commodity prices.

But undaunted, Kusumi said his aim was to deliver results. "We are at a stage where the existing visions are put into practice rather than making more new visions," he said.

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