Tesla supplier Panasonic Energy says cutting China supply for US business a 'No.1 objective'

By Abhirup Roy and Kantaro Komiya

LAS VEGAS (Reuters) -Tesla supplier Panasonic (OTC:PCRFY ) 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 shift a "No.1 objective".

The comments from Allan Swan, President of Panasonic Energy of North America, highlight how incoming U.S. President Donald Trump's pledge to raise tariffs on imported Chinese goods has forced companies around the world to reassess their manufacturing processes.

Panasonic Energy, which supplies batteries to Tesla (NASDAQ:TSLA ) and other automakers, is a unit of Japanese electronics giant Panasonic.

Trump has vowed to impose tariffs of 10% on global imports into the U.S., along with a 60% tariff on Chinese goods. In November, he specifically pledged a 25% tariff on imports from Canada and Mexico when he takes office on Jan. 20.

The first thing the business has to do in regards to Trump's plans is "not to have the supply chain dedicated from China," Swan told Reuters in an interview in Las Vegas on Monday at the CES trade show.

"We do have some Chinese supply but we don't have a lot," he said. "And we have plans not to have some, as we go forward, and that has accelerated."

The bulk of the raw materials for Panasonic Energy's U.S.-made batteries come from overseas suppliers, including ones from Canada, Swan added.

Reuters last month reported that Trump's transition team recommended tariffs on battery materials globally. The Washington Post on Monday reported his aides were exploring narrower tariff plans covering critical imports, which Trump later denied.

In the United States, Panasonic Energy operates a factory 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.

It is not only signing up U.S. suppliers but also helping some of its Japanese and Korean suppliers set up shop in the country and tapping those already planning U.S. operations.

"That's our main focus about building the American supply chain," Swan said. "We have set some quite strong targets about what we want to achieve."



Japanese firms are bracing for the uncertainties around the second Trump presidency, especially his trade policies.

Automakers like Nissan (OTC:NSANY ) and Honda (NYSE:HMC ) have hinted at possible impacts from U.S. tariffs on Mexico, a low-cost production and export hub for the American market. Heavy machinery maker Komatsu (OTC:KMTUY ) last month said a potential U.S.-Canada trade war would be a "one-two punch" on its mining equipment business.

Source: Investing.com