Tesla supplier Panasonic Energy tells Reuters supply cuts in China are ‘goal No. 1’ for US business
By Abhirup Roy and Kantaro Komiya
LAS VEGAS (Reuters) – Tesla supplier Panasonic ( OTC: ) Energy plans to eliminate its supply chain dependence on China for electric vehicle batteries made in the United States, a senior executive told Reuters, calling the change “goal No. 1”.
Comments from Allan Swan, Panasonic Energy’s president for North America, highlight how US President-elect Donald Trump’s promise to raise tariffs on imported Chinese goods has forced companies around the world to rethink their manufacturing processes.
Panasonic Energy, which supplies batteries to Tesla (NASDAQ: ) and other automakers, is a unit of Japanese electronics giant Panasonic.
Trump has promised to impose 10 percent tariffs on global imports into the U.S., along with 60 percent tariffs on Chinese goods. In November, he specifically promised a 25% tariff on imports from Canada and Mexico when he takes office on January 20.
The first thing the company needs to do about Trump’s plans is “not have a dedicated supply chain from China,” Swan told Reuters in an interview in Las Vegas on Monday at the CES trade show.
“We have some Chinese stock, but we don’t have a lot,” he said. “We have plans to not have them as we move forward, and that has accelerated.”
Most of the raw materials for Panasonic Energy’s U.S.-made batteries come from overseas suppliers, including those in Canada, Swan added.
Reuters reported last month that Trump’s transition team had recommended tariffs on battery materials globally. The Washington Post reported on Monday that his aides were exploring narrower tariff plans covering critical imports, which Trump later denied.
In the United States, Panasonic Energy operates a plant in Nevada and plans to open a second plant in Kansas this year.
The company has a “three-pronged attack” on modifying its supply chain, Swan said.
Not only is it signing up US suppliers, but it’s also helping some of its Japanese and Korean suppliers set up shop in the country and attracting those already planning US operations.
“That’s our main focus in building the American supply chain,” Swan said. “We’ve set pretty strong goals about what we want to achieve.”
Japanese companies are preparing for uncertainties surrounding Trump’s second term as president, particularly his trade policies.
Automakers like Nissan (OTC:) i Honda (NYSE: ) hinted at the possible effects of U.S. tariffs on Mexico, a low-cost manufacturing and export hub for the U.S. market. Heavy equipment maker Komatsu ( OTC: ) said last month that a potential trade war between the U.S. and Canada would be a “one-two punch” to its mining equipment business.
