Panasonic chooses Kansas for Tesla EV battery plant, state puts $4 billion in investment

July 14 (Reuters) – Japan’s Panasonic Energy Co, a major supplier to Tesla Inc, 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 up to $4 billion in investment.

The move comes after Tesla CEO Elon Musk said the electric vehicle (EV) maker is facing challenges ramping up production of its domestic batteries, which is contributing to limited car production. He described Tesla’s new factories in Texas and Berlin as “giant money furnaces” that are losing billions of dollars.

The decision by Panasonic Energy, a unit of technology conglomerate Panasonic Holdings Corp, to choose Kansas over Oklahoma for the plant comes after Kansas Gov. Laura Kelly pushed the state legislature to approve a stimulus package of up to $1 billion earlier this year.

Kansas officials said their announced job and investment goals await final approval from Panasonic’s board.

The Panasonic plant will primarily supply batteries to Tesla but is not limited to the company and will have a research department focused on next-generation batteries, Rahm Emanuel, the US ambassador to Japan, told reporters on Thursday.

The deal came after President Joe Biden spoke with Panasonic executives in May when he visited Japan, Emanuel said. The Biden administration has aimed to reduce US dependence on Asia for EV batteries and materials as it seeks to boost the domestic EV industry.

Panasonic is working to supply Tesla with a larger battery, known as the Model 4680, starting production in Japan next fiscal year.

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

Tesla CEO Musk said battery production will be the “limiting factor” to ramping up vehicle production in two to three years, urging suppliers to ramp up battery production.

China’s Contemporary Amperex Technology Co Ltd ( CATL ) ( 300750.SZ ) has also been eyeing U.S. manufacturing sites, people familiar with the matter said.

KANSAS “SUPER-SITE”

A Panasonic spokesman told Reuters that no decisions had been finalized on the new plant’s production capacity, the amount of investment and the size of the workforce.

The plant, to be built in De Soto, on the western border of the Kansas City metropolitan area, is at the center of the company’s drive to increase production of electric vehicles as it pushes for increased battery power and performance. The company already has a factory in Nevada that supplies Tesla. Read more

In a statement, the Kansas Department of Commerce said the state will refund Panasonic $829 million in subsidies after the company completes investments and hiring.

Kansas estimates $2.5 billion in annual economic activity from the plant, which will offset the state’s largest package of development grants.

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

Shares in Panasonic Holdings were up 0.8 percent at 0312 GMT, while Tokyo’s benchmark Nikkei (.N225) index was up 0.7 percent.

“This is a big move for the traditionally conservative Panasonic. The (South) Korean battery makers – LG and SK – have been leading this global battery arms race in the US,” Simon Moores, CEO of battery research company Benchmark, posted in Twitter.

“Critical mineral extraction and refining capacity will need to be established to power what will be a new Panasonic super site.”

Other battery makers have also announced plans to invest in U.S. production or began talks with government officials in recent months, part of an industry trend to meet expected growth in electric vehicles and reduce reliance on Chinese manufacturing and associated supply chain risks. deliveries.

South Korean battery makers have announced investment plans of $5.5 billion this year in U.S. plants.

Reporting by Hyunjoo Jin in San Francisco, Rocky Swift and Mayu Sakoda in Tokyo and Tiyashi Datta in Bengaluru; Written by Kevin Krolicki; Editing by Anil D’Silva, Margherita Choi, Richard Chang and Kenneth Maxwell

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