Panasonic Holdings is negotiating with an American asset management company to sell its struggling auto parts subsidiary to focus on the electric vehicle market.
Panasonic disclosed it has commenced talks to sell a stake in Panasonic Automotive Systems, a subsidiary that makes display systems and onboard EV charging parts for cars, to funds related to Apollo Global Management. Both parties are expected to agree on specifics of the deal by March 2024. The size of the stake to be sold was not disclosed. Panasonic added it does not expect any layoffs if the agreement goes through.
Panasonic has recently focused its resources on three technologies: EV batteries, which it supplies to Tesla; heat pump technologies for air conditioning systems; and supply chain management software. The company has hinted at a possible reshuffle of underperforming business units. Group Chief Financial Officer Hirokazu Umeda said in October that he was regularly meeting with subsidiary executives about the issue and expected “some specific example to be coming” in the future.
The three technologies Panasonic is focusing on fall under a different subsidiary and are not included in the deal being discussed with Apollo.
“Compared with EV batteries, some of the auto parts businesses have been struggling to make much profit,” said Norikazu Shimizu, Senior Analyst at Osaka-based IwaiCosmo Securities. The divestiture is probably aimed at “downsizing the group business to concentrate its resources more on batteries and software,” he added.
Panasonic said it was considering a “potential future public listing” of the auto parts subsidiary if the sale goes through, but did not elaborate. Auto parts makers are facing an increasingly competitive market in terms of both technology and price as the shift to EVs opens the door to newcomers. One notable example is Apple assembler Foxconn, which sees the EV business as a pillar of its growth strategy.
Amid these changes, Panasonic said, “Continued investment will be necessary to achieve sustained growth for the company, especially in software development and electrification,” adding that the potential partnership could bring “access to large and new financing opportunities.”
In October, Panasonic announced a record net profit of ¥288 billion (US$1.9 billion) for the six months through September, thanks in part to a hefty subsidy from the U.S. government for EV batteries. But the company also downgraded some forecasts for the full year due to sluggish demand for consumer electronics in Asia.
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