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Panasonic's new strategy: Pump $4.89b into software, EV batteries and more
One year in, CEO Yuki Kusumi wants diversification and growth
Panasonic will invest ¥600 billion ($4.89 billion) in electronic vehicle (EV) batteries, hydrogen energy, workplace digitization and supply chain software in a strategy shift for the 104-year old Japanese multinational.
The money is slated for spending over three years from 2023 until 2025. Of the total amount, ¥400 billion ($3.2 billion) will go to "growth areas", like supply chain software and automotive batteries among others, and ¥200 billion ($1.6 billion) to "technology pillars," including hydrogen energy and cyber-physical systems.
CEO Yuki Kusumi said in an online news conference on Friday that Panasonic wants to improve battery cell performance and safety while cutting costs, and that mass production of 46mm-diameter EV batteries, otherwise known as 4680s, would start in FY24 at its Wakayama Factory in Japan.
Tesla introduced 4680 batteries, which are five times bigger than the Tesla-used predecessor, in 2020, and Panasonic has remained the car company’s primary battery partner.
While the Wakayama Factory is expected to play a key role in producing the batteries, Panasonic is reportedly in talks with Tesla over a several billion-dollar US factory for the battery production, the actual location of which has not been announced. Kusumi dismissed the US-factory reports as speculation.
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As for some of the remaining earmarked ¥400 billion ($3.26 billion), efforts in supply chain software will fit at least part of this bill, with methods to eliminate wastefulness to be honed by collecting data that is analyzed and employed to fine tune operations.
Last September, Panasonic bought supply chain AI software biz Blue Yonder, which had been acquired just three years earlier by US supply chain software provider JDA.
A video during Panasonic's online news conference showed the software working in conjunction with Panasonic electronics such as 360-degree cameras and sensors to troubleshoot and correct inefficiencies.
While for some managers this could be a version of heaven, and for some shop floor workers a version of hell, for Panasonic's communication department this is just kaizen, a Japanese term for "continuous improvement."
However, lurking within the kaizen are promises to "attentively listen to employees who are willing to take up challenges" and "create a working environment that maximizes potential of unique characteristics," inclusive of optional four-day work weeks and work-from-home enablement.
According to the CEO, all of these $4.89 billion endeavours are executed while targeting an accumulated operating profit of 1.5 trillion yen ($12.2 billion) over the same three-year period.
To have and to hold
Kusumi was anointed CEO just one year ago this month. He replaced Kazuhiro Tsuga who spent years withdrawing the company's business from sectors such as semiconductors, LCD panels and solar panels, and then later declaring it was entering a new era of mergers and acquisitions.
And now, the latest CEO is ushering in another new era. Featuring within the overall strategy shift is Panasonic's planned structure change to become a holding company, an effort which became official this month.
The vision was set forth in 2020, in the footsteps of similar moves by competitor Sony. Panasonic has said the change was not made to cut costs, but rather to allow more business unit autonomy within the newly structured subsidiaries.
The subsidiaries, however, are expected to bring their resources together for the growth of new initiatives. ®