It’s no secret that the electric vehicle (EV) industry has experienced tremendous growth in recent years. However, a significant announcement from Panasonic, the fourth-largest independent EV battery maker globally, suggests that the market may be shifting. Market research by SNE reveals that Panasonic holds an impressive market share of nearly 10%.
The decision made by Panasonic to cancel a project in Oklahoma only adds to the narrative that something is amiss with battery-electric vehicle demand in the United States. However, a closer look at the numbers tells a different story. In fact, U.S. BEV sales have seen a staggering 50% year-over-year increase through the third quarter of 2023. What’s more, 2023 marks the first year that Americans have purchased over 1 million BEVs in a single year – a milestone worth celebrating.
While these figures are encouraging, there are underlying concerns. Cox Automotive reports that EV inventories at U.S. dealers currently sit at 114 days of supply, compared to the overall new car inventory at 71 days of supply. This surplus of unsold EVs, despite growing demand, suggests an oversupply issue within the market. It seems that auto manufacturers have been overzealous in their production efforts, consequently leading the industry to reassess its course.
Auto giants like Ford Motor and GM have already taken steps to address this imbalance. In October, they announced delays in EV assembly capacity as a means of aligning production with market demand. Now, it appears that battery makers, such as Panasonic, are following suit.
Panasonic Energy remains committed to exploring growth opportunities and advancing the EV industry in the United States. While the Oklahoma project has been cancelled, this decision reflects an ongoing evaluation of ways to strengthen their business. As the industry recalibrates itself, it is clear that strategic adjustments are necessary to address the shifting landscape of EV battery production.
Continued Growth Amidst Supply Challenges
Despite the challenges in balancing supply and demand, the EV market continues to experience substantial growth. 2023 has proven to be a pivotal year, with Americans embracing electric vehicles like never before. However, it is undeniable that the industry needs to course-correct in order to maintain a sustainable and thriving market. By reevaluating production capacity and ensuring the alignment of supply with market needs, auto manufacturers and battery makers can secure a prosperous future for the EV industry.
Overcoming Obstacles Together
As the EV industry evolves, collaboration and adaptability will be crucial. By learning from past overpromises and taking a measured approach to production, the industry can avoid future pitfalls. The journey to a sustainable future lies in the collective efforts of car manufacturers, battery makers, and consumers alike. While challenges persist, it is evident that the drive for electric mobility remains strong. With thoughtful adjustments and a commitment to quality, the future of EVs is poised for success.
Panasonic’s Decision Signals Potential Setbacks in Battery Production
Panasonic’s recent decision to delay the opening of their new battery plant highlights a growing trend in the industry. With around 30 battery plants currently in operation or under construction in the US, the projected annual battery production could reach an impressive 1,200 gigawatt hours by 2030. This would be enough to manufacture approximately 16 million battery electric vehicles (BEVs) per year.
However, industry experts suggest that this estimate may be overly optimistic. A more realistic projection would foresee a production volume of 6 to 7 million units by the end of the decade. While still a significant increase compared to 2023, this falls far short of the 45% average annual growth implied by the original estimate.
This adjustment in BEV expectations is likely not an isolated incident. Investors should prepare for additional delays and reevaluations in the near future. It remains uncertain whether other companies in the industry will follow Panasonic’s lead and make similar adjustments.
Currently, China’s CATL holds the majority market share as the largest independent EV battery maker, accounting for approximately 45% of the market. LG Energy Solution ranks third with about 15% market share, while Korea’s SK Innovation rounds out the top four with approximately 6% market share.
These figures exclude internal battery production from prominent players like Tesla, BYD, and General Motors. Combined, these three companies are expected to contribute around 25% of global EV battery production by 2023. Some of their production capacity is developed through partnerships, such as Panasonic’s collaboration with Tesla and LG Energy Solution’s partnership with GM.
Despite Panasonic’s announcement, their U.S.-listed ADRs have not shown a significant reaction in early Wednesday trading. The shares were up by 0.7%, while the S&P 500 saw a slight decline of 0.1% and the Nasdaq Composite rose by 0.1%. Similarly, Tesla and GM shares both experienced a modest increase of approximately 0.6%.
Although the immediate market response appears muted, investors have already felt the impact. Tesla’s stock has dropped around 40% from its peak in 2021 when it exceeded $400 per share. GM and Ford shares have also taken a hit, declining by approximately 40% and 50% respectively from their highest points in 2021.
