TOKYO -- Japanese auto industry stocks are going their separate ways, depending on whether they are positioned to ride the global shift to electric vehicles.
One big winner is Panasonic, which got a huge lift when Tesla adopted its lithium ion batteries to power the Model 3, the U.S. automaker's first mass-market electric vehicle.
"Supplies for the batteries started in June," Hirokazu Umeda, Panasonic's chief financial officer, said at the end of July when presenting quarterly results. "They will contribute to profit from the latter half of fiscal 2017 and throughout fiscal 2018," he added.
The market for electric vehicle batteries will expand to 6.6 trillion yen ($60 billion) in 2025 -- quintuple the figure from last year, estimates Tokyo consultancy Fuji Keizai. In addition, both France and the U.K. decided in July to phase out gasoline cars within the next few decades.
Panasonic's share price closed Tuesday at 1,457.50 yen, up 23% for the year. In comparison, the Nikkei Stock Average rose only 1% over the same period. Meanwhile, NEC, which decided to pull out of the EV battery business, is down 5%.
Asahi Kasei added to its scale by buying out a U.S. company in 2015, as well as boosting the group's capacity in stages. Toray is tripling its current production capabilities by 2020. Asahi Kasei's share price has shot up 23% this year, while Toray rose 4%. Sumitomo Metal Mining, a global producer of battery cathode material, is up 24%.
Nidec, which counts auto motors as a strength, is seeing booming demand from the EV sector. "This incredible situation started around last year. We're literally being flooded with customers," said Chairman and CEO Shigenobu Nagamori.
Nidec plans to expand fiscal 2016's sales of car motors 15-fold by fiscal 2030, and the company's stock has soared 24% this year. Mitsui High-tec, a maker of motor parts, is also coming out ahead.
On the other hand, companies that produce components specific to gasoline-engine vehicles are being hammered in the stock market. Keihin, strong in internal combustion engine parts, derives 30% of its sales from components that will be rendered obsolete by the shift to electric vehicles, according to one market estimate.
"We are rapidly developing control components for drive motors, among other things," said a Keihin executive. But the stock is still down 14%.
"Gasoline cars will not disappear immediately, but as EV demand increases in the medium to long term, the contrast between these stocks will likely become more pronounced," said Masayuki Kubota, head of Rakuten Securities Economic Research Institute.