Panasonic Holdings has announced a delay in reaching full capacity at its electric vehicle battery plant in Kansas.

The new schedule sets the completion for March 2027, according to a report by Nikkei on July 11, 2025.

This decision follows a slowdown in sales faced by Tesla, Panasonic’s primary customer.

This slowdown has impacted the plant’s initial production ramp-up expectations.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Battery manufacturing capacity struggles to align with volatile EV demand

Panasonic’s Kansas plant delay illustrates a persistent challenge in the EV supply chain: battery factories require massive capital investments that can’t easily adjust to market fluctuations.

Tesla’s recent 16% sales drop in April 2025, with approximately 40,000 EVs sold, directly impacts upstream suppliers like Panasonic who must recalibrate their production plans 1.

This challenge has been a recurring theme in the EV industry’s history, where battery makers must balance aggressive capacity expansion with unpredictable demand curves.

The decision reflects the high stakes of battery plant investments, which typically require billions in capital and years of planning, creating particular vulnerability when key customers like Tesla experience sales volatility.

While the overall US EV market is still projected to reach 1.3 million units in 2025 (10.8% market share), the growth rate has moderated compared to earlier forecasts, forcing adjustments throughout the supply chain 2.

2️⃣ Battery cost economics remain the central challenge to EV adoption

Batteries represent up to 50% of an electric vehicle’s production cost, making manufacturing scale critically important for reducing prices and achieving mass-market adoption 3.

The industry has made remarkable progress, with battery pack prices falling from over $1,100 per kWh in 2010 to approximately $156 per kWh more recently, but further reductions depend on maintaining production volume growth 4.

This creates a challenging cycle: EV adoption requires lower battery costs, which requires production scale, which requires confident investment in manufacturing capacity, all of which becomes difficult when market growth shows signs of slowing.