Panasonic shopping for a U.S. site for EV battery plant to serve Tesla, others

Panasonic Corp. is engaged in talks over the site for a new U.S. factory that would supply Tesla Inc. and potentially other EV manufacturers with next-generation lithium-ion batteries, people familiar with the matter said.

The longtime Tesla supplier is looking at several locations for the multibillion-dollar factory, including one in Oklahoma and another in Kansas, the people said, asking not to be identified because the discussions are confidential. The plant could begin operating as soon as 2024, they said.

Though still at an early stage, the plans represent a bold step for Panasonic. Even as it has faced high demand for batteries from Tesla, Panasonic has been slower to build scale compared with rival suppliers LG Energy Solution of South Korea and China’s Contemporary Amperex Technology Co.

In the new U.S. plant, Panasonic plans to make a newly developed, bigger and more powerful “4680” battery, one of the people said. Panasonic may install lines for other batteries at the new facility, as well, though that will depend on customer demand.

Because of the larger volume of 4680 batteries, fewer cells and related parts are needed to power an EV, leading Elon Musk to tout the technology as the key to unlocking $25,000 Teslas. Panasonic will start mass production of 4680 batteries in Japan in the fiscal year starting April 2023. Ahead of that, the company is setting up a prototype production line for the batteries, also in Japan.

Japanese national broadcaster NHK reported earlier this month that Panasonic was looking at sites in Oklahoma and Kansas to build its new plant. The locations would benefit from being close to the new factory that Tesla is bringing online in Texas, where it recently established its headquarters. A committee in Oklahoma’s Mayes County has been studying a proposal to “entice a business” to set up operations, according to a public document posted earlier this month, though it didn’t identify the party.

The timing and budget for Panasonic’s U.S. factory may shift going forward based in part on the company’s experience building 4680 manufacturing lines in Japan over the months ahead, one of the people said. Panasonic is also weighing potential plant locations based on land and labor prices and the availability of state subsidies, the person added.

Panasonic has not announced plans to build a new battery factory in the U.S., a spokesperson for the Osaka-based company said Monday.

Kazuo Tadanobu, CEO of Panasonic’s energy business, said in an interview with Bloomberg News last week that the location of any potential new factories would be evaluated based on partnerships and the economics of certain areas. Nothing has been decided, he said, adding that for the time being Panasonic is focused on building a “solid foundation” for future 4680 production at its Wakayama facility in Japan.

Long partnership

Panasonic and Tesla have a longstanding relationship, with the two companies jointly operating the massive battery plant known as the Gigafactory outside of Reno, Nev. While Tesla plans to make the 4680 cells in-house, it has asked Panasonic to begin producing them as well. The Japanese company wants to sell the batteries to other automakers, and it’s unlikely Tesla will invest in any Panasonic plant in the U.S., the person said.

Panasonic is betting that close to a century of experience making car batteries and its reputation for upholding safety will give it an edge over rivals in producing 4680 cells, which are seen as particularly difficult to mass produce.

The Japanese company’s move comes as a slew of automakers and battery producers announce plans to ramp up capacity to manufacture batteries in the U.S. in preparation for a coming wave of EVs.

In September, Ford Motor Co. and Korea’s SK Innovation Co. announced plans to spend $11.4 billion constructing an assembly plant and three battery factories in Tennessee and Kentucky, set to begin coming online in 2025.

A few months later, Toyota Motor Corp. said it will open its first battery factory in the U.S. in North Carolina, investing $1.29 billion with plans to start production also in 2025.