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Panasonic expanding overseas car battery production -- sensibly

Impossible to fully meet surging demand: battery business chief

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Panasonic's lithium-ion batteries, which are part of Tesla Motor's Model S and Model X battery packs, are displayed in front of a poster of a Tesla car.   © Reuters

TOKYO -- As electric vehicles rapidly gain ground in the global auto market, huge growth in demand is expected for car batteries.

Panasonic is reacting by expanding overseas production capacity in the field, but will not chase unrealistic targets, according to Yoshio Ito, executive vice president in charge of the corporation's automotive and electric parts businesses.

The company's U.S. battery plant, operated jointly with Tesla, has started production of battery packs for Tesla's long-awaited mass-market electric car, while its plant in China is slated to come on stream by the end of the current fiscal year.

The electronics giant, however, acknowledges that keeping pace with demand growth would be simply impossible and plans to focus on fulfilling responsibilities and niche areas.

In a recent interview with The Nikkei, Ito explained the company's plans for electric vehicle-related operations.

Q: Demand for car batteries is showing robust growth. How does Panasonic plan to respond to the trend?

Yoshio Ito, Panasonic's executive vice president

A: Can we completely fulfill the growing demand? Absolutely not. It is unrealistic to try. We are responsible for supplying enough batteries to our existing customers. In particular, we have to fulfill our responsibility to Tesla as its exclusive battery supplier.

Q: Are you also going to supply batteries to new makers of electric cars?

A: We cannot simply sell batteries to carmakers. The energy density of car batteries is rising, making it increasingly more difficult to handle them. We do not supply batteries to EV makers that do not have the ability to assume responsibility for the control and safety of the products. We assess the capabilities [of EV makers] rigorously to decide whether or not we can supply them with batteries.

Q: There have been reports that you have set an in-house target of raising battery sales by 50% between fiscal 2017 and 2020. Could you comment on that?

A: Our executive in charge of the battery business may have talked about such a target, but I have not. If we just look at demand growth, sales could easily more than double. But we have to think about factors like securing necessary engineers, land, facilities and obtaining regulatory permits. We will not pursue an unrealistic target.

Q: Are you planning to make additional investment in the U.S. plant you operate with Tesla?

A: We have already decided to expand the plant's annual battery production capacity up to 35 gigawatt-hours. But we do not currently have any specific plans beyond that, such as constructing a new building or expanding the lines in the existing building.

Q: In addition to car battery production, you are also expanding operations related to autonomous driving and advanced driver-assistance systems. How do you see the outlook for these operations?

A: We are late to start developing systems for highways to catch up with our competitors. So we are going to focus on systems for driving at lower speeds on ordinary roads. We can offer, for instance, display systems that show the driver information from sensors and artificial intelligence. Since we do not have the expertise concerning brakes and steering systems, we need to partner with other companies. We will continue upgrading our competitive technologies for car-mounted cameras. We also hope to develop radar and sonar technologies.

Q: You are testing prototype cars equipped with a self-driving system. Do you have a plan to develop such vehicles for the market?

A: There is speculation that we may develop self-driving taxis. But we have no plans to develop self-driving passenger or commercial vehicles. There are many ways to use autonomous driving technology, such as transporting cargo within factories. We will seek to meet niche demand established automakers do not cover.

Interviewed by Nikkei staff writer Natsuko Katsuki

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