Panasonic Energy’s Kasai Green Energy Park in Japan [Image: KishujiRapid / Wikimedia Commons (CC BY-SA 4.0)]

Japanese Conglomerate Panasonic Announces a $4 Billion Investment to Build an EV Battery Mega-Factory in Kansas

Japan Asia

On July 13, 2022, Governor of Kansas Laura Kelly and Panasonic Energy Co., Ltd., a subsidiary company of the Japanese electronics conglomerate Panasonic Holdings, jointly announced the company’s plan to invest $4 billion in its second United States electric vehicle (EV) battery facility in De Soto, Kansas. Panasonic Energy’s first plant is located within EV manufacturer Tesla’s Gigafactory in Sparks, Nevada. This investment will be the largest economic development project in the history of Kansas. Panasonic’s decision to build a plant in Kansas follows the April opening of Tesla’s second EV plant, Gigafactory Texas, in Austin, Texas. The new Panasonic plant will manufacture next-generation 4680 lithium-ion batteries, which will be supplied solely to Tesla. According to Governor Kelly, this investment is expected to create up to 4,000 new jobs directly, support 4,000 jobs created by suppliers and local businesses, and 16,500 construction jobs.

Following Panasonic’s announcement of its $4 billion investment in Kansas, the White House released a statement, welcoming this significant investment, and asserted it is a product of the Biden Administration’s efforts to create more resilient and secure supply chains. “This announcement by Panasonic builds on more than a year of progress building an end-to-end American supply chain for lithium-ion batteries, a market currently dominated by China,” said Brian Deese, the Director of the National Economic Council at the White House, in a statement. Rahm Emanuel, the US Ambassador to Japan, also issued a statement, calling Panasonic’s investment plan in Kansas a “new milestone” in US-Japan economic and technological leadership. “When the United States and Japan work together, invest together, and build together, there is nothing we can’t achieve together,” said Ambassador Emanuel.

As first reported by the Japanese public broadcaster NHK, Panasonic had been considering Oklahoma and Kansas as potential locations for its multibillion-dollar EV battery factory. Seeking to lure this massive investment, Kansas approved a bill in February in which it offered over $1 billion in state incentives and cut the state’s corporate tax, while Oklahoma authorized tax breaks of up to $700 million in state funds in April. Ultimately, though, Panasonic picked Kansas based on the favorable tax treatment and its proximity to Tesla’s Gigafactory Texas. According to the East-West Center’s data visualizations, Japan’s greenfield investment in Kansas since 2003 has amounted to $152 million, and this has created approximately 1,000 jobs. Panasonic’s $4 billion investment will overhaul the Japanese investment in Kansas.

According to an SNE Research report, Chinese battery manufacturer Contemporary Amperex Technology Co., Limited (CATL) dominates the EV battery market, with a 34% global market share in the first half of 2022, which is a 5% increase from the first half of 2021. Panasonic, on the other hand, is the fourth largest manufacturer, with a 10% global market share, a 5% decrease from the first half of 2021. Unsatisfied with its current position in the global EV battery market, however, Panasonic aims to triple or quadruple EV battery production by the fiscal year 2028 as part of its mid- to long-term company strategy. Panasonic identifies itself as a global leader in lithium-ion batteries, and the company plans to expand its market share by growing EV battery production in North America, using the planned Kansas plant as its foothold.

Kenji Nagayoshi is a participant in the Young Professionals Program at the East-West Center in Washington. Originally from Japan, he is a second-year MA candidate at American University's School of International Service, studying international affairs with a focus on international security. His interests include Japanese and East Asian security as well as Japan-U.S. relations.