The energy unit of Japan’s Panasonic Holdings opened a new tab and missed its operating profit guidance for the past business year due to lower electric-vehicle battery production in Japan and a fall in sales of consumer products, the company said on Thursday.

Operating income for the key segment, which makes batteries for Tesla, opens new tabs, and other automakers, totalled 88.8 billion yen ($570.18 million) in the year that ended in March, missing its own 113 billion yen forecast, Panasonic said.

Automotive battery manufacturers have been hit by slowing growth in EV demand in the United States and Europe and cutthroat competition in China.

While the North American EV market is growing, its pace of expansion has slowed due to a saturation of early-adopter demand, Panasonic said in presentation materials.

The operating profit is expected to rise 23% in the current business year to reach 109 billion yen, the company said, adding that it expected demand to expand as more car models in affordable price ranges become available.

Panasonic Energy faces fierce competition from other Asian battery makers such as China’s CATL (300750.SZ), opens new tab and South Korea’s LG Energy Solution (373220.KS), opens new tab.

Chinese battery makers grew faster than rivals to account for more than two-thirds of global EV battery capacity last year, according to data from consultancy Counterpoint Research.

Panasonic Energy has sought to expand its footprint in the North American market. It has a plant in Nevada and has broken ground on a second one in Kansas, which would take its auto battery capacity to 80 gigawatt hours (GWh) a year.

Panasonic forecast a 5% rise in operating profit for its entire business for this year to 380 billion yen.
Its operating profit declined 25% to 40.7 billion yen in the fourth quarter.