News out of Japan indicates that that Panasonic Holdings (HD) is in the final stages of cooperating with Subaru and Mazda to set up domestic production bases for electric vehicle (EV) batteries.

Panasonic HD is currently supplying EV batteries only to Tesla, and by increasing the number of suppliers, it aims to improve its profitability.

Subaru and Mazda aim to secure a stable supply of batteries that have a proven track record from Tesla.

Batteries for EVs are assembled from cells, which are key components, and then packaged before installation.

According to sources, for Subaru, Panasonic HD is planning to set up a new production line in Gunma Prefecture, where the company has a number of production facilities, to handle everything from cell manufacturing to packaging.

For Mazda, the company plans to set up packaging lines in Hiroshima and Yamaguchi Prefectures, where the company has factories, and to transport cells from the Panasonic Group’s battery factory in Osaka.

Subaru and Mazda plan to begin full-scale mass production of EVs in the second half of the 2020s.

They are also considering using vacant space at their existing factories for the new battery production base they are building.

The government has designated storage batteries, including those for EVs, as “specific important materials” under the Economic Security Promotion Act, and it is expected that subsidies under the same act will be utilized for the establishment of this base.

Panasonic Holdings has positioned EV batteries as a growth area, but orders from Tesla have been declining due to the slowdown in EV demand in North America. In order to reduce its reliance on Tesla, the company agreed in March this year to cooperate with Subaru and Mazda to supply EV batteries.

The driving range of an EV is largely determined by the performance of the battery. By teaming up with Panasonic HD, Subaru and Mazda hope to secure a stable supply of high-performance, safe batteries.