Panasonic has no plans for new Tesla battery plant in China - CEO

TOKYO (Reuters) - Panasonic Corp 6752.T has no plans to build a new battery plant for Tesla Inc TSLA.O in China, the Japanese company's chief executive said, as it struggles to make money from its existing battery business with the electric vehicle (EV) maker.

FILE PHOTO: Attendees look over a Tesla Model X powered by Panasonic batteries at the Las Vegas Convention Center during the 2018 CES in Las Vegas, Nevada, U.S. January 9, 2018. REUTERS/Steve Marcus

“We don’t have any plans at the moment to set up a production site in China for Tesla’s Chinese business,” CEO Kazuhiro Tsuga told reporters at a strategy briefing on Friday.

“It is up to Tesla to decide whether it would use Chinese-made batteries from other manufacturers or get batteries from our Gigafactory 1 (in Nevada),” he said.

The comments reflect Panasonic’s growing caution about its joint battery business with Tesla, which has yet to show sustained profits. Tsuga earlier this year admitted he underestimated risks associated with Tesla.

Reuters has reported that Tesla is in advanced talks with South Korea's LG Chem Ltd 051910.KS to source batteries for vehicles to be made in its Shanghai plant.

Still, Tsuga said he was convinced that Tesla was “an electric vehicle maker with the highest chance of growing and making profits globally” as the U.S. company had successfully formed a premium EV segment.

“We will continue to be a partner with Tesla, and that means we will continue to support Tesla even when it’s in the red ... and will make sure we formulate realistic investment strategies for the future to avoid wasteful investments,” he said.

Panasonic said on Friday it would cut fixed costs by 100 billion yen (712.13 million pounds) by the year ending in March 2022 by consolidating production sites and overhauling loss-making businesses.

The company has turned its focus away from low-margin consumer electronics and bet on businesses that sell to automakers, as well as to corporations such as factory-owners and firms that automate processes.

But the shift has failed to lift profit at a time when the U.S.-China trade war has hit industrial purchases and output, and the global car market is contracting.

Reporting by Makiko Yamazaki; Editing by Himani Sarkar and Stephen Coates