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Panasonic Bets On EV Market With $4 Billion Kansas Battery Plant

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Panasonic Holdings made a big bet on the U.S. electric vehicle market over the summer, as the Japanese electronics giant announced plans to build a massive, $4 billion battery plant in Kansas that will supply cells to Tesla and other EV manufacturers.

The plant will be located in a suburb of Kansas City and will create as many as 4,000 jobs when it opens later this decade,

Panasonic Energy said in the July 14 announcement. Upon completion, it will be one of the biggest battery plants in the United States. Kansas reportedly landed the project after rolling out $829 million in incentives. “With this major development, Kansas is being recognized around the world for our talented workforce, innovative environment and quality of life,” said U.S. Senator Jerry Moran. 

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Panasonic is Tesla’s main battery supplier and already works with the Elon Musk-led company at a Gigafactory in Sparks, Nevada. The Nevada plant is among the world’s lithium-ion battery factories, having surpassed 6 billion EV battery cells shipped since opening five years ago. 

The new Kansas plant is expected to supply batteries to both Tesla and other EV companies that plan to use cylindrical cells. Panasonic spent months scouting locations for a “mega factory” either in either Oklahoma or Kansas that can mass produce new high-capacity lithium-ion batteries that will significantly increase the range of EVs, according to the Green Car Reports website. Gov. Laura Kelly called it the “largest private investment in Kansas history,” and one that will be “transformative for the Kansas economy.” 

Locating the plant in Kansas is a good strategic fit because of its proximity to Tesla’s new Gigafactory in Austin, Texas, as well as rival Rivian’s plant in Normal, Illinois. The Kansas location will also be close to where Ford assembles E-Transit vans. Panasonic has already supplied Ford with cells for some of its hybrid vehicles.

At the time of the announcement, Panasonic had not confirmed which cell types it will manufacture at the new plant, though at least part of its focus will likely be on producing Tesla’s larger 4680 format. As Reuters reported, Panasonic is working to supply Tesla with the 4680 model, beginning with production in the next fiscal year.

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Whatever type of batteries the Kansas plant produces, it is part of a broader move by battery and EV companies to ramp up production to meet an expected rise in demand for electric and hybrid vehicles.

Hyundai Motor unveiled plans to invest $5.5 billion into a Georgia plant that will make both EVs and batteries. That followed the news that General Motors and LG Chem will build a $2.6 billion battery plant in Michigan. Last year, Ford announced that it will partner with South Korea’s SK Innovation to spend more than $11 billion on battery production facilities in Kentucky and Tennessee.

The EV industry’s rapid expansion aligns with U.S. government plans to transition the country toward electric vehicles and away from those that run on gasoline. The Biden administration has said it wants fully electric vehicles to make up more than half of U.S. new-car sales by 2030. The government’s plans include expanding the number of EV charging stations in the country as well as accelerating the production of EVs, batteries, and related components.

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In May, the federal government announced it will provide $3.1 billion in funding to support efforts to make electric vehicle batteries and components in the U.S. Separately, the U.S. Department of Energy announced that an additional $60 million will be available to support the reuse and recycling of used EV batteries. The aim is to establish a robust domestic supply chain so the U.S. can reduce its reliance on foreign suppliers.

The Panasonic deal itself was put together after President Joe Biden spoke with Panasonic executives during a May trip to Japan, Reuters reported. 

“With the increased electrification of the automotive market, expanding battery production in the United States is critical to help meet demand,” Panasonic Energy President Kazuo Tadanobu said in a statement.

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