Japan’s Panasonic Cuts Full-Year Operating Profit Forecast Amid Industry Slowdown
A slowdown in the electric vehicle (EV) market, particularly in the United States, has led to a significant revision of Japan’s Panasonic Holdings’ full-year operating profit forecast. The company now expects group operating profit of 320 billion yen ($2.12 billion) for the fiscal year ending March 2026, down from 370 billion yen expected previously.
This revised forecast comes after a disappointing second quarter through end-September, where Panasonic reported an operating profit of 1.2 billion yen in its energy unit, representing a 96.4% decline from the same period last year. The company’s decision to reduce its automotive battery sales projection for North America by 13% to 40 gigawatt hours (GWh) for the fiscal 2025/26 further demonstrates the impact of the EV market downturn in the United States.
Panasonic has cited several reasons for revising its full-year operating profit forecast, including:
- The negative effect of U.S. tariffs on its automotive battery business
- Lower-than-anticipated sales volumes due to a decrease in demand for EVs
- Reduced windfall from U.S. federal tax credits for the automotive battery business
- Bigger-than-expected restructuring expenses
The impact of these factors is not limited to Panasonic alone, as another major player in the industry, LG Energy Solution, also announced a similar revision in its earnings guidance earlier on Thursday. The South Korean battery maker now forecasts a mid-single-digit percentage decline in 2025 sales due to the end of U.S. tax credits on EV purchases.
Automotive Battery Sales: Key Factor in Panasonic’s Revised Forecast
Automotive battery sales have been a crucial component of Panasonic’s business, with its energy unit being a key contributor to the company’s overall profitability. However, the decline in demand for EVs in North America has led to a significant reduction in automotive battery sales projections.
According to Panasonic’s latest estimates, it now expects only 40 GWh of automotive battery sales in North America for the fiscal 2025/26, down from an earlier projection of 46 GWh. This decrease is attributed primarily to the deterioration of EV market conditions in the United States.
Energy Storage Systems: A Potential Growth Area
While the decline in demand for EVs has led to a reduction in automotive battery sales, Panasonic sees a potential growth opportunity in energy storage systems for data centres. The company expects higher sales of these systems this fiscal year, which could help mitigate some of the losses incurred by its energy unit.
Industry Slowdown: A Broader Impact
The decline in demand for EVs and the subsequent revision of operating profit forecasts are not isolated incidents specific to Panasonic or LG Energy Solution. The entire industry is grappling with a slowdown due to factors like the end of U.S. tax credits on EV purchases and increasing competition from other sources.
Conclusion
Panasonic’s revised full-year operating profit forecast of 320 billion yen ($2.12 billion) reflects the broader challenges faced by the electric vehicle (EV) market, particularly in North America. The decline in demand for EVs has led to a significant reduction in automotive battery sales projections, affecting not only Panasonic but also other major players like LG Energy Solution.
While Panasonic sees potential growth opportunities in energy storage systems for data centres, the company’s overall operating profit forecast remains under pressure due to industry-wide factors such as U.S. tariffs, lower-than-anticipated sales volumes, and reduced windfall from tax credits. The slowdown in the EV market poses significant challenges for companies like Panasonic, which are heavily reliant on this segment for their profitability.