Panasonic to build EV battery plant in Kansas to supply Tesla
Japanese company receives incentives from President Joe Biden and the state to set up plant
Japan’s Panasonic Energy, a major Tesla supplier, said on Wednesday it has selected Kansas as the site for a new battery plant that state officials said will create up to 4,000 jobs with investment of up to $4bn.
The move comes as Tesla CEO Elon Musk has said the electric vehicle (EV) maker faced challenges ramping up production of its in-house batteries, contributing to limited car output. He described new Tesla factories in Texas and Berlin as “gigantic money furnaces”, which are losing billions of dollars.
The decision by Panasonic Energy, a unit of tech conglomerate Panasonic Holdings, to pick Kansas over Oklahoma for the plant comes after Kansas governor Laura Kelly pushed the state legislature to approve an incentive package of up to $1bn earlier this year.
Kansas officials said the job-creation and investment targets they announced were pending final approval by Panasonic’s board.
The Panasonic plant will primarily supply batteries to Tesla, but is not limited to the company and it will have a research department focused on next-generation batteries, Rahm Emanuel, US ambassador to Japan, told reporters on Thursday.
The deal came together after President Joe Biden talked with Panasonic executives in May when he visited Japan, Emanuel said. The Biden administration has aimed to cut US reliance on Asia for EV batteries and materials as it aims to boost the domestic EV industry.
Panasonic is working to supply Tesla with a larger battery known as the 4680 model, starting with production in Japan in its next fiscal year.
“With the increased electrification of the automotive market, expanding battery production in the US is critical to help meet demand,” Panasonic energy president Kazuo Tadanobu said.
Tesla CEO Musk has said battery production would be “the limiting factor” for boosting vehicle production in 2 to 3 years, calling on suppliers to raise battery production.
China’s Contemporary Amperex Technology has also been vetting sites for US production, people with knowledge of the matter have said.
Ramp up
A Panasonic spokesperson said no decisions have been finalised on the new plant’s production capacity, investment amount and workforce size.
The plant, to be built in De Soto, on the western fringe of Kansas City’s metropolitan area, is central to the company’s drive to ramp up output for electric vehicles as it pushes for gains in battery power and performance. The firm already has a Nevada factory that supplies Tesla.
The Kansas department of commerce said the state will reimburse Panasonic with estimated subsidies of $829m after the company has completed investment and hiring.
Kansas estimated $2.5bn in annual economic activity from the plant that would offset the state’s largest development subsidy package.
By 2029, Panasonic plans to expand battery production capacity by three to four times, with most of the increase in North America.
Shares in Panasonic Holdings were up 0.8% at 5.12am while Tokyo’s benchmark nikkei index rose 0.7%.
“This is a big move for traditionally conservative Panasonic. [South] Korean battery makers — LG and SK — have led this global battery arms race in the US,” Simon Moores, CEO of battery research firm Benchmark, posted on Twitter.
“Critical minerals mine and refining capacity will need to be established [to] feed what will be a new Panasonic super-site.”
Other battery makers have also announced plans to invest in US manufacturing or begun negotiations with state officials in recent months, part of an industry trend to meet expected growth for EVs and reduce reliance on production in China and related supply chain risks.
South Korean battery makers have announced investment plans of $5.5bn this year in US plants.
Reuters