On March 15, the outgoing CEO of Japan's Matsushita Corporation Tsuga Kazuhiro said that the company plans to reduce its heavy dependence on Tesla by producing batteries for other brands of electric vehicles.

Picture: Panasonic's outgoing CEO Tsuga Kazuhiro

At the time when Tsuga Kazuhiro made the above remarks, Tesla had begun to develop batteries independently and expanded its procurement partners to South Korea’s LG Chem and China’s Ningde era to support the growth of its electric vehicle sales. In an interview, he said: "At some point, we need to get rid of the single-legged approach of relying solely on Tesla. We are entering a different stage and need to pay close attention to the supply of manufacturers other than Tesla."

After serving as Panasonic's chief executive officer for nine years, Tsuga Kazuhiro will step down as chairman on April 1.

Panasonic made its first investment in Tesla in 2010, but it was under the leadership of Ichihiro Tsuga that Panasonic decided to shift its focus to the automotive business. At that time, Panasonic shut down plasma display panels and other loss-making consumer businesses, and jointly invested $5 billion with Tesla to build a giant battery factory in Nevada.

Since the two companies signed the agreement in 2014, Panasonic has spent more than $2 billion on the battery manufacturing joint venture between the two companies. Panasonic predicts that by the end of the current fiscal year in March, the initiative to invest in Tesla's battery business will achieve full-year profits for the first time, and its efforts have finally paid off.

In some respects, Panasonic is no longer the only battery supplier for Tesla, which proves that the latter has grown from a tightly funded company with years of losses to the world’s most valuable automaker with a market value of up to 665 billion U.S. dollars. It is Panasonic itself. More than 22 times the market value.

Panasonic is currently developing new batteries with larger specifications because Musk revealed his ambition to halve the cost of Tesla batteries within a few years. But Tsuga Kazuhiro said that the company will also need to make batteries not just for Tesla's electric cars.

Panasonic and Toyota have established a battery partnership, after the company had previously supplied batteries to European automakers including Volkswagen. However, the cylindrical lithium-ion battery manufactured by Panasonic for Tesla requires sophisticated temperature management skills to prevent the battery from catching fire and make the battery last longer.

Tsuga Kazuhiro said: "We now need to make batteries that are easy to use by other automakers. But it is currently difficult to sell them unless there are other companies that can use the cylindrical batteries we produce for Tesla."

For Tsuga Kazuhiro, cooperating with Tesla is part of his efforts to change the inward-looking corporate culture of this Japanese conglomerate, and it is also one of the main reasons for his high-profile recruitment of executives from Microsoft and Google.

In the two years ending in March 2013, Panasonic had a cumulative loss of nearly US$15 billion. During his nine years as CEO, Ichihiro Tsuga spent most of his time filling these losses and shifting the company to higher-margin businesses.

According to two people familiar with the matter, Panasonic's balance sheet has returned to balance, and the group is currently negotiating a multi-billion dollar acquisition of US supply chain software provider Blue Yonder.

Tsuga Kazuhiro said: "When I tried to shift to high-growth areas such as automobiles, I realized that other businesses could not establish growth strategies, and losses continued to appear everywhere."

In order to break this downward spiral, he announced plans to transform the group into a holding company structure, under the leadership of the new CEO and current head of automobile business Yuki Kusami. He said the move will allow for rapid decision-making, while allowing stricter discipline to ensure that the financial goals of each department can be achieved. He suggested that those failed businesses may be listed for sale.

Tsuga Kazuhiro said: “Because Panasonic is a large-scale company, people think that even if the future prospects of their current department are dire, they can still stay by moving to other departments. We must ensure that there is no such a way to retreat. ." (Little)

Source: NetEase Technology Report, translated by Google Translate