Panasonic (6752.T, PCRFY) shares dipped after the company cut its profit outlook by 15% citing slower electric vehicle battery demand, especially on higher-end EVs where Inflation Reduction Act credits are limited. Yahoo Finance’s Akiko Fujita and Rachelle Akuffo weigh in on consumer trends and how that is impacting demand for higher-end EVs such as Tesla (TSLA) and ultimately general battery production.

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Video Transcript

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AKIKO FUJITA: It is time for today's trending ticker we are watching shares of Panasonic, the Japanese electronics giant, which is also Tesla's longest standing battery cell supplier, announced it's slowing down battery production amid weaker demand for electric vehicles worldwide. Panasonic did note that electric vehicle demand in the US remained steady, highlighting firm sales of EV tax credit-eligible cars.

The stock, they're traded in Tokyo, down about 2%. Rachelle, on the back of that, we should point out the CFO did highlight the impact of the IRA, specifically saying that they have seen sort of a ceiling because consumers have been going for the lower end vehicles, which have a higher tax credit there. That's led to concerns about what the demand looks like for the higher end Teslas because those batteries are produced in Japan.

RACHELLE AKUFFO: Indeed, that $80,000 threshold, that ceiling that the IRA has meant that a lot of those higher end Tesla vehicles did not qualify. That dented demand, especially as there are more affordable options coming to the market. And Panasonic cut its full year profit outlook at its battery unit by 15%. And it was tied to obviously Tesla being one of their most important clients. really putting a dent in things.

But it does speak to this conversation that started to emerge about how perhaps people had misjudged just how fast EV adoption was going to be. We heard from the former chairman of Toyota in last week, something of I told you so. Saying, look, I told you that people weren't going to adopt it at this pace, perhaps wanting to stick with their traditional gas cars or opting instead for hybrids. So something of a rethinking that we might see here. Although still seeing that adoption of EVs, but just not at the pace that they were hoping for.

AKIKO FUJITA: Yeah. And we also saw GM and Ford as well scaling back some of their ambitions in terms of production of EVs. So it does raise the question about where that demand is or how much it will continue.