Panasonic is making a massive bet on electric cars — here’s why the US CEO says it’s a ‘slam dunk’ investment – Business Insider

Posted: Sunday, May 21, 2017

Exhibitors prepare the Panasonic exhibit space ahead of the International Consumer Electronics show (CES) in Las Vegas, Nevada January 5, 2015. The show officially opens on January 6. REUTERS/Rick Wilking
focused on auto tech during CES in January,

Thomson Reuters

Panasonic, like many companies today, is betting big on auto tech
becoming a massive cash cow in the next decade.

New alliances are forming almost every day as companies without a
traditional foothold in the automotive space try to get a slice
of the pie.

Google is working with Fiat
Chrysler on self-driving cars while making next-generation
systems for Volvo; new software startups like
Otonomo are
shelling out their services to major companies like Daimler; and
BMW is partnering with companies like
on data collection.

Panasonic is just one of many players collaborating with the
auto industry to focus on vehicles of the future.

“Our business has evolved over a period of time, especially in
the recent past of going from purely a consumer business to a B2B
business,” Tom Gebhardt, chairman and CEO of Panasonic’s
North American operations, told Business Insider.

“There’s a number of reasons for that: The commoditization of
consumer products [and] the unfavorability in some of the cost
models led us to look for better values in-vehicle technologies,”
he continued.

Working with Tesla and Google

tom gebhardt panasonic
Tom Gebhardt, chairman and CEO of Panasonic’s North
American operations.


Prior to taking over Panasonic’s North American division in
April, Gebhardt led the company’s automotive division for five

Placing an executive with several years of automotive expertise
at the helm of North American operations says something about the
company’s pivot from consumer electronics to auto tech.

That larger cultural shift came from Panasonic President Kazuhiro
Tsuga when he took over in 2012. As Forbes details in a
2016 profile, Tsuga was key to transitioning Panasonic from its
failing plasma TV business to other revenue streams, like
in-flight entertainment systems in planes and electric cars.

Panasonic isn’t stretching too far from its roots when it comes
to this kind of vehicle tech. Gebhardt noted that Panasonic had a
presence in the car radio business starting in 2008, giving it a
natural introduction to multimedia displays with its electronics

Gebhardt said Panasonic is channeling resources toward digital
cockpits and vehicle entertainment systems as self-driving
vehicles become more in reach.

“If the scenario says the car drives itself, it’s similar to
sitting in an airplane seat because you’re no longer actively
driving,” he said. “We see that as an evolution of the space
that’s quite interesting going forward that has infinite
possibilities for us.”

FCA portal concept
Fiat Chrysler’s portal concept.

As an extension of that plan, Panasonic recently worked with Fiat
Chrysler on its semi-autonomous Portal concept
 shown off at CES in January. The concept featured
electronics like an OLED touchscreen with facial and voice

Panasonic sees itself playing a role in fully autonomous cars as
well by developing mobile offices or televisions specifically for
self-driving cars, Gebhardt said.

Perhaps more notable is Panasonic’s relationship with Telsa.

As one of the largest battery manufacturers in the world,
competing with the likes of LG Chem and Samsung SDI, Panasonic
had an easy entry into the electric vehicle space. The
company plans to invest $1.6 billion in Tesla’s Gigafactory.

“The future is definitely electric, no question in my mind, it’s
more of, ‘what is the future timeline?’ Is it 10 years, 15 years,
40 years?” Gebhardt said. “We don’t see an alternative more
interesting that, it’s just a matter of what the adoption hits at
the scale that makes this a slam dunk.”

Tesla gigafactory
massive battery plant, the Gigafactory, in Sparks,


But, there are hurdles to overcome in both these spaces.

From the connected vehicle side, consumer adoption of
infotainment systems is still lagging. J.D. Power led a 2016
study that found that more than 50% of car owners never used their
in-vehicle displays after 90 days of purchase, preferring the
ease of using their smartphones.

But the tech is still in its first-generation, Gebhardt said,
adding adoption will improve with the technology.

Google’s new Android display, for example, will integrate its
smart voice assistant to encourage usage while driving.

“Any time you’re dealing with a first generation product, a user
is not going to be overly comfortable,” he said.

As for electric cars, vehicle adoption in the US is still tepid,
and global sales hover at 1%.

Gebhardt acknowledged adoption is slow in the US,
particularly due to low gas prices — a trend that is likely to
persist if Trump comes through on his promise to roll back fuel
emissions standards. He said, however, that this is likely a
“short-term problem.”

While the US market is slow to progress, there’s still hope when
it comes to China, which is making a concerted effort to
incentivize battery-powered vehicles.

China “being the largest car market in the world has a big
influence on what will happen,” Gebhardt said. “If they adopt in
a big way, that changes the balance of where electric is today
versus where it will be going.”

Panasonic has made some heavy investments in nascent areas, but
expects to see a return on investment soon. Tsuga recently
said Panasonic is expecting an increase in net profit
in fiscal year 2017, its first gain in two years, because of
new bets on transit, Nikkei Asian Review

“We’re pretty bullish on the
fact that this is a space that will continue to grow and there’s
value there,” Gebhardt said.


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