Panasonic reported a 47% year-on-year increase in operating profit at its energy unit for the first quarter, reaching 31.9 billion yen (US$216 million).

The Japan-based conglomerate manufactures batteries for Tesla and other EV makers.

The company said stronger demand for energy storage systems to support data centers contributed to the profit growth.

This comes despite challenges from US tariffs and the loss of certain electric vehicle tax credits.

Panasonic also noted ongoing concerns about a potential slowdown in electric vehicle demand.

The company cited US trade policies and tax changes as key risks.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Battery makers pivot to data centers as EV market faces policy headwinds

Panasonic’s strong profit growth demonstrates how battery manufacturers are successfully diversifying beyond electric vehicles as policy changes create market uncertainty.

The company specifically noted that data center energy storage demand is “growing more than anticipated” while expressing concerns about EV demand slowdown due to U.S. tariff policies and terminated tax credits.

This strategic pivot reflects broader challenges facing the EV battery industry, where U.S. tariffs of 25% on lithium-ion batteries and 100% on Chinese EVs are dampening domestic sales expectations 1.

The data center boom, driven by AI infrastructure investments, is providing battery companies with an alternative revenue stream that is less susceptible to automotive policy changes.

Tesla’s own battery production exceeded 100 GWh in 2023, highlighting the scale at which major players operate. However, even established partnerships like Tesla-Panasonic face pressure from evolving trade policies 2.

2️⃣ Supply chain concentration exposes battery industry to trade disruptions

The impact of U.S. tariffs on Panasonic’s results highlights how concentrated global battery production creates vulnerabilities for manufacturers worldwide.

Recent Panasonic developments