Panasonic Energy, a major Tesla supplier, announced on Wednesday that it has chosen Kansas as the location for a new battery plant, an investment of up to $4 billion (550.6 billion), and the creation of up to 4,000 new jobs.
The move comes after Tesla CEO Elon Musk revealed the company has trouble increasing output due to problems with ramping up production of its own batteries. He said that the new Tesla factories in Texas and Berlin are “gigantic money furnaces” that are losing billions of dollars.
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Panasonic Is Constructing a New Factory in Kansas
Panasonic plans to construct a plant in De Soto, Kansas, to increase output for electric vehicles and pursue improvements in battery power and performance.
In addition to their Nevada factory, the Japanese company also has one in California, where they supply Tesla.
After Kansas Governor Laura Kelly successfully lobbied the state legislature earlier this year to pass an incentive package worth up to $1 billion, Panasonic Energy, a subsidiary of Panasonic Holdings Corp., chose Kansas over Oklahoma as the site for the facility.
After Panasonic has finished investing and recruiting, the Kansas Department of Commerce said in a statement that the state would compensate Panasonic with anticipated subsidies of $829 million.
Kansas predicted the plant’s $2.5 billion in yearly economic activity would offset the state’s greatest development subsidy package.
A state official said that Panasonic’s board needed to approve the job creation and investment goals that had previously been announced. An official from Panasonic stated that no determinations had been made regarding the new plant’s production capacity, investment amount, or workforce size.
By 2029, Panasonic expects to boost battery production capacity by three to four times, with most of the increase in North America.
The 4680 model is a more powerful and larger battery that Panasonic is working to sell to Tesla, with production set to begin in Japan.
The Oklahoma Department of Commerce released a statement in which it expressed “optimism for additional prospects” to attract investment from Panasonic.
“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.
Musk has called on suppliers to increase battery output, saying that it will be “the limiting factor” in increasing car production in the next two to three years.
US Ambassador to Japan Rahm Emanuel told reporters on Thursday that the decision between building the facility in Kansas or Oklahoma came “down to the wire” three weeks ago.
Musk’s Tesla is not the only company that will benefit from the plant’s research into next-generation batteries, which Emanuel says will be its primary focus.
According to Emanuel, the agreement was finalized after President Joe Biden met with Panasonic executives during his trip to Japan in May.
“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 USA,” Simon Moores, chief executive 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.”
To accommodate the anticipated increase in demand for electric vehicles (EVs) and to lessen exposure to supply chain risks associated with China’s manufacturing sector, other battery manufacturers have announced investments in U.S. manufacturing or begun negotiations with state officials in recent months.
South Korean battery manufacturers have revealed investment intentions of $5.5 billion in U.S. plants this year.
People familiar with the matter have indicated that China’s Contemporary Amperex Technology Co. Ltd (CATL) ‘s main global battery supplier, has also been scouting locations in the United States.
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