The decision follows Tesla’s April opening of a second American EV factory in Texas to meet brisk demand.
Panasonic’s move comes as competitors from China, South Korea and Europe ramp up investment in additional production.
The Japanese company picked the site of the new facility based on factors including its proximity to Texas and favourable tax treatment. Oklahoma had also been considered as a candidate location.
Panasonic aims to triple or quadruple EV battery production capacity by fiscal 2028 from the current level of roughly 50 gigawatt-hours per year.
It plans to install two production lines at a battery component factory in Wakayama Prefecture, Japan, in fiscal 2023 and begin manufacturing its new high-capacity model, the 4680. That investment is expected to total roughly ¥80 billion (US$580 million).
Panasonic had said it would determine whether to build new manufacturing facilities after seeing how production at the Wakayama plant fared in terms of profitability.
Increasing production demands from Tesla, a leading source of the Japanese electronics group’s earnings, were likely a factor in the decision for a new US plant, along with Panasonic’s progress on the new technology. Prototypes started to ship in May.
Rahm Emanuel, the US ambassador to Japan, issued a statement Thursday morning calling it “a new milestone” in US-Japan economic and technological leadership.
“When the US and Japan work together, invest together, and build together, there is nothing we can’t achieve together. Panasonic Energy’s plan to build one of the largest battery production sites for the next generation of electric vehicles in the great State of Kansas is a vote of confidence for the strength of the US economy and the quality of the American workforce.”
Emanuel noted that Panasonic’s investment plan of up to US$4 billion will create as many as 4,000 American jobs.
Panasonic’s first US plant in Nevada, the Gigafactory 1, is jointly operated with Tesla. The Japanese company invested roughly ¥200 billion in that facility, which only began turning a profit in the year ended March 2021 as high defect rates kept mass production from getting off the ground.
Tesla’s sales have been rising steadily, with annual vehicle deliveries reaching about 936,000 last year. Beyond its supply from Panasonic, the automaker plans to meet its growing appetite for batteries with in-house production of 4680s, along with procurement from outside sources.
Competition is intensifying in the electric vehicle battery market. South Korea’s LG Energy Solution and General Motors announced this year plans to spend US$2.6 billion on a new battery plant in Michigan.