Panasonic to reduce Chinese supply dependency amid US tariffs

Tesla supplier Panasonic 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 President Donald Trump's pledge to raise tariff imports on Chinese goods has forced companies around the world to reassess their manufacturing processes.

Panasonic Energy, which supplies batteries to Tesla as well as other automakers, is a unit of Japanese electronics giant Panasonic.

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

The first thing the business has to do in regards to Trump tariffs 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 Panasonic Energy's US-made batteries come from overseas suppliers, including ones from Canada, Swan added.

Tariffs

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 US plant in Kansas this year.

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

Automakers like Nissan and Honda have hinted at the possible impacts of US tariffs on Mexico, a low-cost production and export hub for the American market.

Heavy machinery maker Komatsu said last month that a potential US-Canada trade war would be a "one-two punch" on its mining equipment business.