Tesla Battery Supplier Panasonic to Build $4 Billion EV Plant in Kansas, Aims to Create 4,000 Jobs

Japan's Panasonic Energy Co, a major Tesla Inc supplier, said on Wednesday it had selected Kansas as the site for a new battery plant that state officials said would create up to 4,000 jobs with investment of up to $4 billion (roughly Rs. 31,900 crore).

Panasonic Energy, a unit of tech conglomerate Panasonic Holdings, selected Kansas over Oklahoma for the plant after Kansas Gov. Laura Kelly pushed the state legislature to approve an incentive package of up to $1 billion (roughly Rs. 8,000 crore) earlier this year.

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.

In a statement, the Kansas Department of Commerce said the state would reimburse Panasonic with estimated subsidies of $829 million (roughly Rs. 6,600 crore) after the company has completed investment and hiring.

Kansas estimated $2.5 billion (roughly Rs. 20,000 crore) in annual economic activity from the plant that would offset the state's largest development subsidy package.

State officials said the job creation and investment targets they announced were pending approval by Panasonic's board. A Panasonic spokesperson told Reuters no decisions had been made on the new plant's production capacity, investment amount and workforce size.

By 2029, Panasonic plans to expand battery production capacity by three to four times, with most of the increase in North America.

Panasonic is working to supply Tesla with a more powerful, larger battery known as the 4680 model, starting with production in Japan.

In a statement, the Oklahoma Department of Commerce said it was "optimistic for additional opportunities" to win investment from Panasonic in the future.

"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.

Shares in Panasonic Holdings were up 0.6 percent at 0205 GMT while Tokyo's benchmark Nikkei index rose 0.7 percent.

The decision on whether to build the plant in Kansas or Oklahoma came "down to the wire" three weeks ago, U.S. Ambassador to Japan Rahm Emanuel told reporters on Thursday.

The plant will primarily supply batteries to Tesla, but is not limited to the company run by Chief Executive Elon Musk, and it will have a research department focused on next generation batteries, Emanuel said.

The deal came together after President Joe Biden talked with Panasonic executives in May when he visited Japan, Emanuel said.

Other battery makers have also announced plans to invest in U.S. 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 $5.5 billion (roughly Rs. 43,900 crore) this year in US plants.

China's Contemporary Amperex Technology Co Ltd (CATL), the top global battery supplier, has also been vetting sites for U.S. production, people with knowledge of those discussions have said.

© Thomson Reuters 2022