Motivating Panasonic's automotive push are shriveling profits from its traditional business in consumer electronics. The company is a leader in automotive batteries for hybrids and EVs, and in onboard infotainment systems. But now it wants to broaden its auto industry position.
The push targets three big areas: batteries, integrated cockpit systems and safety systems. Panasonic expects batteries to have the biggest surge.
It forecasts a 54 percent rise in sales of comfort, infotainment and cockpit systems, to $5.52 billion in next two years. And sales of safety technology, such as cameras and sonar systems, are pegged to rise 68 percent to $5.43 billion.
But Ito predicted that sales of environmental components, including batteries, capacitors and relays, will soar 88 percent to $6.57 billion over the period.
Tesla sales will drive much of that growth. As the sole battery provider to the U.S. EV maker, Panasonic is ramping up output at the gigafactory to supply the entry-level Tesla Model 3 sedan that just went into production.
Tesla also has bullish targets. The automaker wants to boost Model 3 production to 20,000 units a month by year end, 500,000 vehicles in 2018 and about 1 million a year by 2020.
Panasonic is a partner in the gigafactory, supplying investment funding and manufacturing staffing.
"As we see improving production at the gigafactory, the weight of sales to Tesla will grow," said Ito, who meets regularly with Tesla CEO Elon Musk to discuss battery production plans. "We will make the necessary investments as we go along."
Tesla sales account for about 30 percent of Panasonic's battery business in 2017, including the Tesla Model S sedan and Model X crossover. But Panasonic delivers batteries to many carmakers. At the end of March, 88 models worldwide had adopted the supplier's batteries. Panasonic opened a lithium ion plant in China this year to serve customers there.
Panasonic makes two basic kinds of batteries — cylindrical ones for Tesla and boxy "prismatic batteries" for other automakers. Ito said lithium ion chemistry will remain the base technology for some time and that engineers expect to eke better performance from it.
Panasonic believes it can increase the power density, which governs acceleration, of its prismatic lithium ion batteries by half by the fiscal year ending March 31, 2020. It also wants to double their energy density, which determines driving distance.
Panasonic will ride growing demand for batteries as automakers electrify their vehicles in response to increasingly stringent emissions controls, Ito said.
"There is a change in the market environment," he said. "We expect explosive demand."