Panasonic delays US battery plant as EV demand falls

Panasonic Holdings has adjusted its battery production plans due to a slowdown in global EV demand.

CEO Yuki Kusumi said the company is postponing a third US battery plant and focusing on starting production at its second factory in Kansas.

While Panasonic has supplied Tesla with batteries from its Nevada plant since 2017, it sees potential in expanding US operations as automakers seek to reduce reliance on Chinese suppliers, aided by the Inflation Reduction Act.

Initial plans for a third factory were based on rapid EV adoption, but expectations have cooled due to issues like charging infrastructure and battery costs.

Production in Kansas is expected to begin before March 2026. A key customer is urging Panasonic to speed up operations to source batteries domestically.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Panasonic’s battery strategy reflects industry experience spanning five decades

The company’s cautious approach to expansion is informed by its extensive history in battery technology, having produced Japan’s first lithium primary batteries back in 1971 1.

This experience helps explain CEO Kusumi’s skepticism about rapid EV adoption, particularly in markets where charging infrastructure remains underdeveloped—a perspective that’s now being validated by market conditions.

The industry-wide recalibration is evident across multiple manufacturers, with Nissan recently scrapping plans for a new battery plant in Japan and Honda delaying its Canadian EV investment by approximately two years 2.

Panasonic’s decision to pause plans for a third factory demonstrates how even established battery manufacturers are adjusting to market realities despite previous optimistic projections about EV growth.

The company’s half-century of battery innovation provides institutional knowledge that newer market entrants lack, potentially giving Panasonic more realistic expectations about adoption curves for new automotive technologies.

2️⃣ Early US manufacturing investments create tariff-resilient positioning

Panasonic’s Nevada gigafactory, operational since 2017, now represents a significant strategic advantage as trade tensions escalate between the US and China 2.

The timing of their Kansas factory coming online in 2025 appears particularly fortunate as competitors scramble to establish US production capacity—Hyundai and SK On’s $5 billion Georgia joint venture won’t be operational until later 3.